Industrial Relations Around the World: Labor Relations for Multinational Companies [Reprint 2017 ed.] 9783110847178, 9783110125443

Table of contents :
Preface
Acknowledgements
Contents
Introduction
Australia
Austria
Brazil
Canada
The People's Republic of China
Czechoslovakia
France
The Federal Republic of Germany
Great Britain
India
Israel
Italy
Japan
Jordan
Korea
Lebanon
Mexico
New Zealand
Nigeria
Poland
Saudi Arabia
Singapore
Taiwan
The United States
Venezuela
Biographies

Citation preview

de Gruyter Studies in Organization 45 Industrial Relations Around the World

de Gruyter Studies in Organization International Management, Organization and Policy Analysis

An international and interdisciplinary book series from de Gruyter presenting comprehensive research on aspects of international management, organization studies and comparative public policy. It covers cross-cultural and cross-national studies of topics such as: — management; organizations; public policy, and/or their inter-relation — industry and regulatory policies — business-government relations — international organizations — comparative institutional frameworks. While each book in the series ideally has a comparative empirical focus, specific national studies of a general theoretical, substantive or regional interest which relate to the development of cross-cultural and comparative theory will also be encouraged. The series is designed to stimulate and encourage the exchange of ideas across linguistic, national and cultural traditions of analysis, between academic researchers, practitioners and policy makers, and between disciplinary specialisms. The volumes present theoretical work, empirical studies, translations and 'state-of-the art' surveys. The international aspects of the series are uppermost: there is a strong commitment to work which crosses and opens boundaries. Editor: Prof. Stewart R. Clegg, University of St. Andrews, Dept. of Management, St. Andrews, Scotland, U.K. Advisory Board: Prof. Nancy J. Adler, McGill University, Dept. of Management, Montreal, Quebec, Canada Prof. Richard Hall, State University of New York at Albany, Dept. of Sociology, Albany, New York, USA Prof. Gary Hamilton, University of California, Dept. of Sociology, Davis, California, USA Prof. Geert Hofstede, University of Limburg, Maastricht, The Netherlands Prof. Pradip N. Khandwalla, Indian Institute of Management, Vastrapur, Ahmedabad, India Prof. Surendra Munshi, Sociology Group, Indian Institute of Management, Calcutta, India Prof. Gordon Redding, University of Hong Kong. Dept. of Management Studies, Hong Kong

Industrial Relations Around the World Labor Relations for Multinational Companies Edited by Miriam Rothman, Dennis R. Briscoe and Raoul C. D. Nacamulli

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Walter de Gruyter · Berlin · New York 1993

Dr. Miriam Rothman Associate Professor of Human Resource Management, School of Business Administration, University of San Diego, San Diego, California, USA Dr. Dennis Briscoe Professor of Human Resource Management, School of Business Administration, University of San Diego, San Diego, California, USA Prof. Raoul C. D. Nacamulli Professor of Personnel Administration and Labor Relations, and Director, Center of Research on Business Organizations (CRORA), Università L. Bocconi, Milano, Italy With 10 figures and 21 tables © Printed on acid-free paper which falls within the guidelines of the ANSI to ensure permanence and durability. Library of Congress Cataloging-in-Publication Data Industrial relations around the world : labor relations for multinational companies / edited by Miriam Rothman, Dennis R. Briscoe, and Raoul C. D. Nacamulli. p. cm. — (De Gruyter studies in organization ; 45) Includes bibliographical references and index. ISBN 3-11-012544-7 (acid-free paper). ISBN 3-11-012547-1 (paper acid-free paper) 1. Industrial relations. 2. International business enterprises — Management. I. Rothman, Miriam. II. Briscoe, Dennis R., 1945. III. Nacamulli, Raoul C. D. IV. Series. HD6971.15473 1993 658.3Ί5 —dc20 92-32313 CIP Die Deutsche Bibliothek — Cataloging in Publication Data Industrial relations around the world : labor relations for multinational companies / ed. by Miriam Rothman ... — Berlin ; New York : de Gruyter, 1993 (De Gruyter studies in organization ; 45 : International management, organization and policy analysis) ISBN 3-11-012547-1 Pb. ISBN 3-11-012544-7 Gb. NE: Rothman, Miriam [Hrsg.]; GT © Copyright 1992 by Walter de Gruyter & Co., D-1000 Berlin 30. All rights reserved, including those of translation into foreign languages. No part of this book may be reproduced in any form — by photoprint, microfilm, or any other means nor transmitted nor translated into a machine language without written permission from the publisher. Converted by: Knipp Satz und Bild digital, Dortmund — Printing: Gerike GmbH, Berlin. — Binding: D. Mikolai, Berlin. — Cover Design: Johannes Rother, Berlin. — Printed in Germany.

Preface

This book was written to provide an overview of selected industrial relations systems from around the world. Stemming from a need by the authors for more up-to-date teaching and reference materials, and from a perceived need by multinational enterprises to have better access to descriptions of the labor relations systems in the countries in which they operate, we began the process of creating this book of readings for both the academic and business markets. As with any global undertaking, difficult decisions had to be made with regard to which countries would be included. Due to limitations of space, deadlines, long-distance and cross-border communications, and varying quality of mail and telephone/fax systems, we were unable to cover as many countries as we would have liked. However, with unlimited time and resources, everything would have been possible. As the saying goes, "time was of the essence". Given the fast pace of change in the industrial relations scene around the world, such a process would have guaranteed that by the time we achieved success, the early contributions would have been out of date. As it was, this was a constraint against which we and our contributing authors constantly struggled, such that, in the end, some contributions had to be dropped because the total time of preparation for this book was too long. Therefore, the countries which are presented in this book were selected, in part, based on the network of scholars known to us and willing to participate; and, in part, based on the selection process itself (that is, on the length of time it took us to identify authors who would participate and the time it took to get their contributions). On the one hand, we regret that certain areas of the world or particular countries are not represented, such as the Scandinavian countries; on the other hand, we are pleased to offer a collection of chapters representing a fair sample of the many countries and regions of the world, including the Far East, Eastern Europe, and the Middle East. The authors were asked to prepare their chapters in English (only two chapters were received in another language) on the development of industrial relations in their respective countries. This minimized translation problems, but increased the editorial involvement to ensure "proper" and consistent English. Although each author was given the same chapter outline to follow, the reader will notice that the chapters do not all follow identical formats. The diverse academic and professional backgrounds of the authors and the unique cultural, political, social, and economic conditions of their respective countries made it

VI

Preface

necessary for the authors to retain some flexibility in chapter contents. Nevertheless, the chapters in this book report the growth and development of industrial relations on six continents and in 25 countries from throughout the world, providing what we believe to be an outstanding overview and, indeed, considerable detail, on the traditions and management of industrial relations in those countries. As the reader will recognize, we have witnessed possibly unprecedented change in the political and economic conditions of many countries and regions of the world. The practice of industrial relations - being both political and economic - has been no exception. The impact on this book should be obvious: the descriptions of the industrial relations systems in many countries is only as complete and/or accurate as the stability of the governmental and economic systems during the last year or so in those countries. In the preparation of this book, we were quite pleased to be able to offer chapters on two Communist countries of Eastern/Central Europe (Poland and Czechoslovakia). As all readers will know by the time this book is published, all of Eastern/Central Europe has undergone historical change. And the U.S.S.R. no longer exists! Communist governments have been replaced with democratically-elected governments. And centrally-planned economies are giving way to free marketbased economies. The industrial relations systems in these countries are, of course, also undergoing rapid and unprecedented changes. The most recently completed chapter of these two, the chapter on Poland, illustrates a key point: that new laws and procedures tend to build on existing laws and systems, even when there is the desire to create a totally new system (which was also true for the development of the Communist systems before this). The traditions described in the book have created attitudes and laws which are part of the new environments. So... to some extent, these chapters must be viewed as historical documents that describe a situation that no longer exists. But to a large extent, these chapters also describe laws and practices which will in many respects only be changed gradually. While some laws and practices have been discarded completely, other laws and practices have been retained. For these reasons, we felt it was important to include these chapters in the text, in spite of the major changes (or, maybe, because of them) that these countries have undergone. On a broader scale, the recent experiences of the Eastern/Central European countries are only a more exaggerated example of what has been happening all over the world. This has made it difficult to produce an up-to-date collection of chapters on many countries. Even so, given the linkages of present and future developments to the laws and practices already in place, we believe this book to be an up-to-date description of the variety of industrial relations systems from around the world.

Acknowledgements

The development and organization of a book such as this could not be accomplished without the cooperation of many colleagues who shared their own professional networks with us. In particular we would like to thank Donald T. Weckstein, Dean Tsvold, Robert Spich, Charles M. Rehmus, Motohiro Morishima, Yeo Lin, Jay Kim, and Kerr Inkson for their support. In addition, we would like to thank James Burns, Dean of the School of Business Administration at the University of San Diego and the Italian Ministry of Education for funds for release time, translation, telephone, and fax support as well as continual encouragement. The secretarial staff of CRORA at Bocconi University in Milan are thanked and at the School of Business of the University of San Diego who are also to be commended for their high caliber performance and wonderful dispositions as each chapter came across their desks with the inevitable short time schedules for word-processing. We thank our editor, Dr. Bianka Ralle, for her belief in this project and the speed with which she responded to our queries and needs. Having a good relationship with an editor and publisher in another country depends on promptness and communication. Dr. Ralle and Walter de Gruyter excelled on both counts. Although this may seem obvious, we want to add a very strong thank you to our chapter authors, whose scholarship is the essence of this book. It is difficult communicating across national borders. And it was not easy to complete chapters on a topic, the content of which in many locales seems to change almost daily. Our authors always responded with speed and competence to our needs. It is their professionalism to which we owe the end-product quality of this book. Lastly and most importantly, we thank our families. When this book was initially conceived among the three of us there was only one child among us now there are five (not counting the book itself, whose publishing is much like giving birth). To Russ, Judith, Morissa, Georgia, Forrest, Laura, Judith, and Noemi - we're glad you are with us and appreciate your love and support.

Contents

Introduction Dennis R. Briscoe, Miriam Rothman, Raoul C. D. Nacamulli The Industrial Relations System Unionism The Current Industrial Relations Environment The Post-Industrial Era The Global Environment Conflict Resolution Summary References

1 3 4 5 5 7 8 9 10

Australia Greg J. Bamber and Edward M. Davis

11

The Political and Economic Environment Relevant Laws The Main Actors Employers' associations Unions Government Labor-Management Processes How Effective are these Labor-Management Processes? Industrial Democracy and Employee Participation Equal Opportunities Centralized Pay Determination Some Trends Industrial Relations Reform Conclusions Acknowledgement References

12 13 14 14 15 16 17 18 20 21 21 23 25 26 27 27

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Austria Franz Traxler

31

Introduction The Formal Framework of Industrial Relations The Actors Labor Employers The State Nature of Labor Relations Process Current Trends in Industrial Relations Notes References

31 33 36 36 39 40 42 43 45 45

Brazil Russell E. Smith

47

Introduction Section 1 : The Corporatist Framework of Labor Organizations Section 2: State Regulation and Intervention under the CLT Section 3: Modifications of the Corporatist Industrial Relations System . Section 4: The Industrial Relations System after the 1988 Constitution . . Section 5: Current Trends in Brazilian Industrial Relations References

47 49 52 55 59 62 64

Canada Robert Rogow

67

The Environmental and Institutional Setting The Structure of Collective Bargaining The Legal and Public Policy Environment Nature of the Labour Relations Process How Collective Bargaining is Carried Out The Pattern of Strike Activity Collective Bargaining Outcomes Relationships During Life of the Agreement Industrial Relations Actors The Role of the Government Conflict Management The Role of Employers and Employer Associations The Role of the Unions

67 67 69 72 72 72 74 75 77 77 77 78 79

Contents

XI

The Numbers and Types of Unions Future Trends in Industrial Relations Declines in Union Density and Bargaining Power Modification of the Bargaining System Notes References

80 82 82 84 85 85

The People's Republic of China Joan H. Coll

87

Historical Overview Relevant Laws General Institutional Arrangement Nature of Labor Relations Process Perspective The Possibility of Collective Bargaining Strike Activity and Types of Agreements The Industrial Relations Actors Trade Unions The Government Potential for the Rise of Other Players The Future for Industrial Relations References

87 87 89 91 91 93 93 94 94 95 96 96 98

Czechoslovakia Tomás Jezek Historical Overview, General Institutional Arrangement The Nature of the Labor Relations Process Industrial Relations Actors The Role of the Unions The Role of the Government Current Trends in Industrial Relations

99 99 102 104 104 106 108

France Laurent Goater and Frederic Richer

Ill

Historical Overview The Players in Industrial Relations in France Unions

Ill 112 112

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Contents

Government Business Labor Relations Process Collective Bargaining Economic Bargaining Issues Non-economic Bargaining Issues Management and Union Rights The Negotiating Process Current Trends Current Attitudes What the E.E.C. Will Bring Notes Bibliography

115 118 119 119 121 121 121 122 123 123 124 124 125

The Federal Republic of Germany Wolfgang Streeck

127

The Structure and Condition of the West German Economy Changing Patterns of Employment The Role of Trade Unions and Employers Associations The Role of the State: Facilitation of Industrial Self-government and Cooperation Patterns of Industrial Conflict The Collective Bargaining System in Transition Current Problems and Future Prospects Notes References Additional Reading

127 128 129 132 136 137 139 145 145 148

Great Britain Graham Hollinshead

151

Introduction and Background The Institutional Framework The Context The Legal Framework Trade Unions Employers The Government Collective Bargaining in Action The Pattern of Strike Activity

151 151 151 154 155 159 161 163 165

Contents

XIII

Overall Trends Contemporary Patterns Current Trends in British Industrial Relations Notes References

165 166 167 169 170

India Kokila Doshi

173

Post-Independence Period Industrial Relations Actors Trade Unions Employers and their Organizations The Role of Government The Nature of the Labor Relations Process Industrial Disputes: Magnitude and Causes Prevention and Settlement of Disputes Current Trends References

174 176 176 177 178 180 180 181 184 186

Israel Amira Galin

187

The Parties to Israeli Industrial Relations The Unique Character of the Histadruth The Israeli Employers Government Intervention The Nature of the Labor Relations Process Collective Bargaining in Action The Pattern of Strike Activity Collective Agreements Third-party Intervention The Form of Third-party Intervention Mediation Voluntary Interest Arbitration Labor Courts Current Trends in Israeli Industrial Relations References

189 189 190 191 192 192 195 198 199 199 200 201 202 203 203

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Contents

Italy Raoul C. D. Nacamulli

205

Introduction Background The Italian Industrial Relations System Trade Unions Management The State Industrial Relations Structures and Processes Prospects

205 205 207 209 212 213 214 215

Japan Koji Taira

217

Overview Nature of the Labor Relations Process Industrial Relations Actors Current Trends in Industrial Relations Conclusion References

217 220 223 227 230 231

Jordan Muhsen Makhamreh

235

Historical Overview Nature of Labor Relations Process Strike Activities in Jordan Agreement Behavior in Jordan Industrial Relations Actors in Jordan The Role of Management Labor Unions in Jordan Unionization in Jordan Structure of Labor Unions in Jordan Labor Leadership in Jordan Current Trends in Industrial Relations in Jordan References

235 236 237 238 238 239 239 240 240 241 242 243

Korea Michael Byungnam Lee

245

Institutional Arrangement and the Role of Government

245

Contents

The Land, History, and Politics Labor Market Labor Laws and the Role of Government Union and Management Labor Movement and Labor Unions The Role of Employers: With the Focus on Chaebols Nature of Labor Management Relations Bargaining Structure and Scope Incidence and Characteristics of Labor Disputes The Labor-Management Councils at Firms The Labor Relations Commission, Unfair Labor Practice and Dispute Resolution Current Status and the Prospects for the Future Labor-management Relations in Foreign Invested Firms In Which Direction is South Korean Industrial Relations Moving? Notes References

XV

245 246 247 254 254 258 260 260 261 262 263 264 264 265 266 267

Lebanon AfifZeinaty

271

Historical Overview Relevant Laws General Institutional Arrangement Nature of the Labor Relations Process The Process of Collective Bargaining Strike Activity Industrial Relations Actors The Role of Unions The Role of the Government The Role of Employer Associations The Number and Types of Unions The Leadership Structure of the Unions Current Trends in Industrial Relations References

271 272 273 275 275 277 278 278 281 281 282 282 283 284

Mexico Richard A. Morales

285

Relevant Laws General Institutional Arrangement Nature of the Labor Relations Process

286 287 289

XVI

Industrial Relations Actors The 1980s Current Trends Note References

Contents

292 293 293 295 295

New Zealand Peter Boxali and John Deeks

297

Historical Overview The British Influence Towards a New Zealand Solution The Industrial Conciliation and Arbitration Act 1894 Major Modifications of the System - The Demise of Arbitration The Nature of the Labour Relations Process How is Collective Bargaining Carried Out? Adversarialism and Strike Activity Industrial Relations Actors Trade Unions Employer Associations The Role of Government Current Trends in Industrial Relations Summary and Conclusion Note References

297 297 298 298 299 302 302 303 304 304 305 306 307 309 310 310

Nigeria Tay o Fashoyin

313

Overview Labour Laws and Public Policy Industrial Relations Actors Trade Unions Employers' Associations The Nature of Labour Relations Collective Bargaining Trade Disputes and Settlement Contemporary Industrial Relations References

313 315 316 316 319 320 320 322 323 324

Contents

XVII

Poland Maria Matey

327

Poland's Economic Situation General Situation of the Labour Law in Poland Labour Law Faces Unemployment A New Model of Industrial Democracy in Poland The Unions Employers' Organizations Collective Labour Disputes Collective Bargaining Workers' Participation

327 327 328 330 330 331 332 333 334

Saudi Arabia Badiuddin Syed

335

History Constitution The Government The Judicial System Labor Relations Workforce The Law Collective Bargaining Employment Contract Saudization Protections and Social Services Employment of Foreigners Industrial Relations Labor Commissions and Settlement of Disputes The Procedure for Filing Suit Employment of Women Strike Current Trends Employment Labor Management Relations References

335 335 335 336 336 336 337 337 337 338 339 339 339 339 340 341 342 342 342 344 344

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Contents

Singapore Mohamed Ariff.

345

Historical Overview Relevant Labor Laws General Institutional Arrangement Nature of the Labor Relations Process Industrial Relations Actors Role of Trade Unions Role of Government and Third Party Role of Employers Current Trends in Industrial Relations Future Labor-Management Relations Acknowledgement References

345 345 352 355 360 361 362 363 364 367 368 368

Taiwan Gee San

371

Introduction A Brief Historical Overview General Institutional Arrangement Relevant Laws Nature of Labor Relations Process Role of Government Current Trends in Industrial Relations Summary and Conclusion Notes References

371 371 372 374 375 381 382 384 386 386

The United States Miriam Rothman and Dennis R. Briscoe

389

Relevant Laws General Institutional Arrangement Nature of the Labor Relations Process Industrial Relations Actors Impasse Resolution Current Trends in Industrial Relations Future Directions for Labor-Management Relations

389 392 393 395 396 397 399

Contents

XIX

Venezuela Hector Lucena

401

Historical Overview Relevant Laws General Institutional Arrangements Nature of the Labor Relations Process Collective Bargaining Labor Conflicts and Mechanisms to Resolve Them The Industrial Relations Actors Trade Unions Union "Parallelism" Unionization Rates Government Labor Policy The State and its Relations with Unions and Employers Employers and Employers Associations Employers Associations The Industrial Relations Situation Industrial Relations Challenges and Perspectives Notes

401 401 401 403 403 405 406 406 407 407 408 409 410 411 411 412 414

Biographies

415

Introduction Dennis R. Briscoe, Miriam Rothman, Raoul C. D. Nacamulli

The phenomena of industrial relations may be more alike than different throughout the world. Yet every country has its own unique approach to the development of the play among the industrial relations actors - labor, management, government, and the public - and their various representing organizations. While the script may be tightly written for staging in some countries, other countries provide ample opportunity for improvisation in the actors' roles. As a consequence, firms that conduct business, particularly on an international, multinational, or transnational basis, must understand and deal with this diversity. Some countries have developed industrial relations systems patterned after the laws and traditions of other countries. Others have pursued relatively unique avenues to labor relations. Within this milieu, each country has developed a tradition and legal framework that reflects its own special history and political experience, albeit often based on patterns developed in another country. In some countries, union activity is basically economic, e.g., Canada, the United States, West Germany, and Japan. In other countries, particularly England, France, Italy, and those in Latin America, unions tend to be very political and often try to achieve their objectives through political action rather than through direct, decentralized collective bargaining. In some countries, union activity is focused on industry-wide, or even national-level, bargaining while in other countries union relations are very decentralized, taking place almost exclusively at the local firm level. Other than diversity, the other common theme in industrial relations around the globe at this time in history - the first half of the 1990s - is drastic and pervasive change. In most countries, particularly the United States and most European countries, the union scene is changing rather dramatically (see, for example, Atkinson, 1986; Levinson and Maddox, 1982; Northrup et al., 1988; Dowling and Schüler, 1990; and Tigner, 1989). For example, Europe's trade unions are facing a decline unprecedented in the postwar period. As in the U.S., the shrinkage of smokestack industries such as autos and steel is leaving European unions hard pressed to deliver job security. The resulting decline in union membership is weakening labor's traditionally active role in government policy-making in many countries. [...] [T]he nationwide and industrywide bargaining that has given union negotiators strong leverage in Europe is breaking down [and] employers are winning more efficient work rules (Melcher et al., 1982:80).

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Dennis R. Briscoe, Miriam Rothman, Raoul C. D. Nacamulli

This rapidly changing nature of labor relations practice around the world plus the diversity inherent in country and culture specific laws and traditions, has made it increasingly important that Human Resources Management (HRM) managers in multinational firms have a thorough understanding of at least the basics of the industrial relations systems in the countries in which they must operate. Providing just such an understanding is the intent and purpose of this book. This first chapter, therefore, provides an introduction to the book along with the authors' perspective on the key components of this topic: International Industrial Relations. This book provides an up-to-date description of Labor Relations around the world. At least, this description is as up-to-date as was possible: the rapid political change (e.g., the opening of Eastern Europe and the Soviet Union, the reversion of Hong Kong to Chinese rule in 1997, and the Gulf War in 1990-1991) and economic change (e.g., the removal of barriers to free trade in the European Community, the negotiation of a free-trade agreement for all of North America, the development of free trade zones in South America, the rapidly developing economies such as Thailand, Malaysia, Mexico, Turkey) that are occurring make it impossible to ensure that the descriptions of every country's industrial relations practices will exactly reflect the conditions pertaining when the book is read. This chapter provides a frame of reference for understanding Industrial Relations. It provides an introduction to the major problems that multinational enterprises confront in conducting labor relations in multiple countries as well as the problems unions face when dealing with multinational enterprises (MNE's). Finally, this chapter provides an overview of the approaches to dispute resolution as practiced in the many countries reviewed in this book. When all other procedures fail, be they collective bargaining or political lobbying, firm-level and economic strikes or national work stoppages, the approach to the resolution of impasses may be the ultimate determiner of the nature of Industrial Relations in any particular country. As Dowling and Schüler (1990) suggest, there are two key characteristics of international labor relations that one should understand prior to examining industrial relations in various countries. First, there are many problems encountered when comparing industrial relations systems across national boundaries. The terminology may mean different things in different countries and contexts. The legal systems are different. Even the overall objectives may be different. Secondly, the understanding of any country's labor relations system requires an appreciation of its historical origin. Industrial relations phenomena tend to be faithful expressions of the societies in which they develop (Schregle, 1981), of their characteritic features, and of the power relationships between various interest groups. "Industrial relations cannot be understood without an understanding of the way in which rules are established and implemented and decisions are made in the society concerned" (Schregle, 1981:28). For this reason, the

Introduction

3

chapters in this book provide fairly extensive coverage of the particular country's history and development. Several factors appear to underlie the historical differences that emerge among industrial relations actors and behaviors (Poole, 1986). These include the type of technology and industrial organization that exists when unions are first organized, the methods of union regulation chosen by the government, the extent of ideological divisions within the trade union movement, the influence of religious organizations on union development, and the nature of managerial strategies for labor relations, particularly in large public and private enterprises.

The Industrial Relations System Industrial Relations develop simultaneously with the development of societies, particularly with the development of their economies. Dunlop (1958) defines industrial relations as the interrelationships between management, labor, and the state. Organizations with "managements" and "labor" develop as a direct consequence of the development of the nations' technology and economy. The concept of an industrial relations system is connected to a wider view of society as a system composed of at least three different but mutually interrelated subsystems: the economic, political, and, indeed, the industrial relations subsystems. Hence, a number of parameters that are taken for granted in economic and political theories are considered as significant variables in the field of industrial relations (and vice versa). The analysis of an industrial relations system requires the separate analysis of factors such as: -

-

-

the nature of the actors of an industrial relations system, i.e., workers and their organizations, employers and their associations, and the governmental bodies that regulate and interact with workers and employers and their respective organizations; the context in which the actors operate as defined by the technological characteristics of industrial development, market structure, dominant factors and products of the economy, and the power distribution within the society; and the ideology common to all the actors - affecting their behaviors.

The rules regulating the relationships among the actors are the output of the industrial relations system. Therefore, they are the dependent variables of the interaction among the above-described factors. The chapters in this book describe the industrial relations systems of various countries, providing portraits of those industrial relations systems utilizing these factors: the actors, the ideology, the context, and the rules. The main task, therefore, of industrial relations theory consists of the explanation of the establishment of the various rules in different industrial

4

Dennis R. Briscoe, Miriam Rothman, Raoul C. D. Nacamulli

relations systems/countries and how and why they evolve as a reaction to the changes experienced by the system. For example, the institutionalization (in law, formal organizations, and procedures) of the industrial relations system is linked to the level of industrial development of the society. The greater the degree of industrialization, the greater will be the plurality of interests acknowledged in that society. This "pluralistic system" becomes therefore more adequate to achieving the objectives of the industrial relations actors than in the priorexisting "unitary system" (Fox, 1965). The pluralistic system, at the level of the company, is based on the assumption that an economic organization is a coalition of interest groups integrated by a top management with a holistic view of the total firm. The mission and specific task of top management is that of striking a balance between the expectations of the various stakeholders of the organization, e.g., employees, owners, customers, the community, suppliers, and financial institutions. The development and stability of labor organizations (i.e., unions), from this point of view, guarantees that management - submitted to pressures of various kinds from a multitude of sources - will not disappoint or frustrate labor's legitimate expectations and demands. If a pluralistic approach is adopted, industrial conflict, then, becomes not a waste of resources but rather a functional stimulus to technical, organizational, and social development. The application of the concept of an industrial relations system to the resolution of labor conflicts causes such conflict to no longer be viewed as an external (to the firm) and social disturbance, but rather as an institutionalized process for the technical, economic, and social growth of developed countries.

Unionism With such an industrial-relations systems view, the very existence of trade unions, representing the interests of workers, transforms what might be seen to be unproductive labor conflict into a productive, integrated method for dispute resolution. Indeed, unionism is often defined as "collective action on the part of employees to improve their working and living conditions". A number of different approaches to an understanding of the role of unions have been developed. Various countries in this book illustrate that unions have developed under different models in different locations, adding to the great diversity experienced among the industrial relations systems used around the globe. One view of the role of unions - labelled the Marxist approach - sees unions as political actors. Indeed, trade unions are, typically, one of the possible forms of proletariat organization, as are also political parties and movements. According to Marx, union organization is an important instrument in the hands

Introduction

5

of the proletariat to safeguard its interests, that is, to avoid the worsening of their working and living conditions as caused by the capitalist class. Therefore, trade unions, as political actors and together with other institutions, represent the interests of subordinate classes, help employees to become more aware of their exploitation, and assist the evolutionary process moving toward a better social order. This view of the role of labor unions still pertains in communist and former communistic countries, such as the Peoples' Republic of China, the Soviet Union, and Czechoslovakia. A second interpretation of unionism views union organizations as trustees of countervailing power (Galbraith, 1967). Trade unions, from this point of view, are a necessary "counter-weight" to balance economic objectives (profit) with social objectives (justice). It is therefore up to unions' counterpower to combine profit and justice without the State having to resort to authoritarian regulatory measures. The industrial relations systems of many of the countries described in this book have evolved from this particular perspective. Yet a third interpretation considers trade unions to represent a collective voice, expressing the disappointments and expectations of workers (Hirschmann, 1970). For subordinate employees to be represented by trade unions that perform as their collective voice, the union(s) must develop and maintain a formalized communication channel with managers as well as the State. This means that workers use the union to express their opinions, debate with management and the State, negotiate, and protest. Procedures for debate and negotiation are established between labor and management, providing a formal 2-way channel for exchanging views and communicating on a regular basis. This view of the industrial relations system is also illustrated by a number of the countries' systems described in this book. These three interpretations of trade unions (as political actors for the achievement of specific bargaining objectives, countervailing power, or collective voice), rather than being mutually exclusive, are complementary models that help to explain trade unions' roles in the multifaceted current reality. Indeed, the industrial relations systems that have evolved in many countries show components of all three of these perspectives.

The Current Industrial Relations Environment The Post-Industrial Era The concept of "industrial relations" has developed as a description of the relationships between the main economic actors (employers, employees, and the state) in an environment marked by the birth, consolidation, and development of industrialization processes, where the majority of the labor force in a particular

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Dennis R. Briscoe, Miriam Rothman, Raoul C. D. Nacamulli

developing or developed country are employed in jobs related to industrialization. Many authors now suggest that the developed countries are moving toward a post-industrial era. In this post-industrial era, the industry-centered model of industrial relations may become obsolete. This appears to be particularly true of the production organization-centered model, focused on mass production, with significant divisions between the professional/technical and managerial classes of employees and those directly carrying out the tasks of production with, typically, limited or easily replaceable skills. In the post-industrial era, there is a shift of jobs and, thus, the labor force away from the industrial sector into the services sector. This occurs for many reasons, such as the increase in productivity due to technological innovations from increased use of mechanization, automation, and computerization, and the transfer of strictly inustrial activities from richer countries to less developed countries. This switch from the industrial era to the post-industrial era has a direct impact on the nature of industrial relations and its actors. Fewer workers are engaged in the industries and types of jobs from which unions have drawn their strength and purpose. Workers in service jobs tend to be less interested in unionization and, anyway, are more difficult for unions to organize (organizations are smaller, more dispersed, working conditions are typically better, and many more workers are only on the job part-time). In addition, the nature of the conflict between management and labor is changed. With the nature of the economy shifting from industrial to service-oriented, conflict becomes less of a labor-management issue and more of a public (or customer) issue. Indeed, in the service sector or in service jobs, the withholding of services to gain advantage in labor disputes directly affects customers. This metamorphosis of labor conflicts viewed together with the economic shift to services marks an historic period. Indeed, the reality that many conflicts now take place in the service sector and not just in the industrial sector is not simply the result of the growing unionization rate in the former and contraction in the latter. The reasons are even more deep-rooted. The core of conflicts shifting to the service sector lies in the fact that public and private services are ever increasingly central and indispensable to the post-industrial society. In other words, in the era of ascendancy in the service sector, not only does the relative importance of services increase, but so also does industrial production become more closely interrelated with the provision of both traditional and advanced services. On this eve of the end of the millenium (and the beginning of a new one), the industrial relations systems model originally developed by Dunlop (1958) needs revision to make room for the new actors (consumers/customers/users), new relationships (such as the impact of labor conflicts on these new actors in the

Introduction

7

new service-oriented economies), and new events (more visible conflicts, international impacts, etc.).

The Global Environment The newly global economy places new stresses on industrial relations. Multinational enterprises (MNE's - with operations largely decentralized to operate as a local actor in many countries around the world) and transnational - or global - firms (with operations throughout the world and decisions made about employees, sourcing, financing, technology, and location of manufacturing and services without regard to international boundaries) tend to dwarf the power and influence of labor unions. Because of the nature of MNE's, unions tend to be very concerned about their perceived lack of relative power.MNE's operate in many countries and often in many industries. In contrast, unions almost always only have membership in one country and normally in only one industry. Thus MNE's are seen as a threat by unions. They typically can only bring pressure to bear on a small segment of an MNE - one industry within one country. Union leaders see the following characteristics of an M N E as the bases for the threat to union bargaining power: formidable financial resources; alternative sources of supply; ability to move productive facilities to other countries; superior knowledge and expertise in labor relations; a remote locus of authority; and production facilities in many industries (Kennedy, 1980:330).

Thus unions around the world are trying to establish international federations and Trade Secretaries to provide assistance to national unions in dealing with MNE's. Their ultimate goal is to develop transnational bargaining. In addition, these international federations are working within both national legislatures and regional and international bodies such as the European Community, the United Nations, the Organization of Economic and Cooperative Development, and the International Labor Organization, to pass restrictive legislation and regulation to control the power of MNE's relative to unions and employees. In particular, international directives are developing to at least require multinational firms to abide by the industrial relations statutes in each of the countries within which they operate. Even with this expressed union concern with the power of MNE's and the very gradual trend toward transnational bargaining, there remain a number of barriers to more rapid change (Levinson and Maddox, 1982): 1. the varying laws and practices among different countries; 2. economic and cultural differences among different countries; 3. employer opposition;

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Dennis R. Briscoe, Miriam Rothman, Raoul C. D. Nacamulli

union reluctance at the national level, because the national leadership often fears that multinational bargaining will transfer power from them to the international leadership; and employee unwillingness to subordinate local concerns to concerns of workers in other countries.

Conflict Resolution Organizations, be they public or private, tend to be open systems, subject to the pressures of politics, business, and personalities. Whether these organizations are unions, businesses, or governmental, mechanisms develop for the survival of the entity and the resolution of its disputes. Just as the behavior of the industrial relations actors is shaped by the development of the socio-political and economic environment, so too are the methods of conflict resolution used by the parties. From the system of central planning, in its model form, which does not provide any conceptual reason for the existence of conflict between the interests of the employer and employee (e.g., Czechoslovakia) to the Islamic laws which govern the working relationships among the employee, employer, and government (e.g., Saudi Arabia), each system of resolution must be understood in the context of its native land. In some cases, the laws governing these relations are as old as the nations themselves (e.g., New Zealand, Mexico, Australia); in other cases they change with each new regime (e.g., Nigeria, Poland). Nonetheless, there are certain commonalities inherent in the mechanisms utilized. At the most basic level is the strike. In most countries, they occur with more or less frequency as a function of time in the industrial history of the country and place in the economic cycle (with strikes more likely to occur early in the development of a country's industrial economy and during periods of improving business activity). There are also certain legal restrictions around strike activity (where strikes are not outlawed), stipulated by each country for the operationalization of alternative dispute resolution systems which are adhered to more or less by the respective parties. The labor legislation in Venezuela, for example, describes detailed procedures for conflict resolution; however it is considered to be "excessive legalism" and is ignored by both unions and government alike. Austria, on the other hand, has minimal legislation regarding labor-management relations. Moreover, strikes are by no means universal in their intent, e.g., improve wages and working conditions. In Japan, the purpose of the strike is to demonstrate how solid is the membership support for the union, not to put pressure on the employer to realize how costly it is to not agree with the union. The cost the employer most fears is damage to his prestige and public image

Introduction

9

rather than monetary. For in both Japan and Singapore, labor, management, and the government collaborate collectively to reach a guideline for a general wage increase every year. To the degree that unions develop to "give voice" to workers, and provide some balance of power in the labor-management relationship, the methods of conflict resolution (aside from a strike or lockout) tend to universally rely on some form of mediation, conciliation, arbitration, and/or adjudication. These methods may be mandated for individual conflicts, collective conflicts, or both, and may be different or the same at the federal or local levels. Whether the stipulated methods are voluntary or compulsory, final and binding or not, conducted by government representatives, judges, lawyers, academics, experts, or laypersons, most of the covered countries use one or more of these approaches as either a means of preventing or resolving industrial action.

Summary Industrial relations around the world, and the systems within which they operate, have undergone a transition in recent years, a transition which is expected to continue as the 21st century approaches. While many variables have contributed to this phenomenon, perhaps the most noteworthy have been the globalization of domestic economies around the world and the technology explosion that has reverberated throughout the service and manufacturing sectors of the world's economies. Given the recency of these changes, and the significant impact they have on international business, it is important to have an up-to-date book of readings describing those unique systems of handling labor relations in different countries. As the scope of multinational enterprise and global business increases, it becomes increasingly necessary for many people to understand and/or interact with labor relations in more than one country. Those who must work with labor relations in a global context need to become and stay informed as to the many changes being experienced within the various national systems. Students of industrial relations and international business must also learn about the different national approaches to industrial relations. Yet the changes which are occurring are very complex and, in any case, vary from country to country. The purpose of this book, therefore, is to provide an up-to-date framework for studying labor relations in this international arena, as well as providing the necessary background for understanding the labor relations systems of many countries around the world and the changes they are experiencing. This introductory chapter has provided a theoretical and practical framework for analyzing and understanding industrial relations in an international context. And the rest of the book provides descriptions of the development and current

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practice of industrial relations in 25 specific countries, allowing the practitioner, researcher, and student a view of the diversity of labor relations as it is practiced in a representative, yet significant, portion of the world economy.

References Atkinson, K. (1986) "State of the Unions". Personnel Administrator, Sept., 55-59. Bell, D. (1973) The Coming of Post-Industrial Society. New York: Basic Books. Dowling, P. J. and R. S. Schüler (1990) International Dimensions of Human Resources Management, ch. 7. Boston: PWS-Kent Publishing Dunlop, J. T. (1958) Industrial Relations Systems. New York: Holt, Rhinehart. Fox, A. (1965) Industrial Sociology and Industrial Relations. London: Royal Commission on Trade Unions and Employers Associations, Research Paper no. 3, H. M. S. O.. Galbraith, J. K. (1967) The New Industrial State. New York: Houghton Mifflin. Hirschmann, A. O. (1979) Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and State. Cambridge, MA: Harvard University Press. Kennedy, T. (1980) European Labor Relations. Lexington, MA: Lexington Books. Levinson, D. L., Jr. and R. C. Maddox (1982) "Multinational Corporations and Labor Relations: Changes in the Wind?". Personnel, May-June, 70-77. Melcher, R., J. Templeman, J. Rossant, S. Dryden, and B. Arnold (1984) "Europe's Unions are Losing Their Grip". Business Week, November 26, 80-88. Northrup, H. R., D. C. Campbell and B. J. Slowinski (1988) "Multinational UnionManagement Consultation in Europe: Resurgence in the 1980s?". International Labour Review, 127, 5, 525-543. Poole, M. (1986) Industrial Relations: Origins and Patterns of National Diversity. London: Routledge. Schregle, J. (1981) "Comparative Industrial Relations: Pitfalls and Potential". International Labour Review, 120, 1, 15-30. Tigner, B. (1989) "The Looming Labour Crunch". International Management, February, 26-31.

Australia Greg J. Bamber and Edward M. Davis

This chapter explores the context of Australian employment and industrial relations, describes the key players and examines labor-management processes, industrial conflict and pay determination. It concludes with a discussion of trends and the debates about industrial democracy and employee participation, equal opportunities, incomes policies and industrial relations reform. From the main market economies of the world, Australia appears to be a remote island continent. Much of its native flora and fauna is unique. Similarly, despite its British legacy, its arbitration-based industrial relations are distinct from the comparable arrangements in Europe, North America, Japan and most other countries. Britain used to be Australia's main trading partner. But since the 1960s, Japan has taken its place. The change in Australia's orientation was accelerated by Britain's entry into the European Community in 1973. Furthermore, Australians are beginning to see themselves as part of the Asia-Pacific region, rather than as a European enclave in the South Pacific. Australia has an area equivalent to mainland USA (apart from Alaska). Yet it has only 17 million (m.) people, so is relatively small compared with the USA (250 m.), Japan (123 m.), or France, the UK, Italy and Germany (56-62 m.). Australia is significantly larger than New Zealand, Ireland, Denmark, Switzerland, Austria and Sweden (3.3 - 8.5 m.). It is in a similar, medium size range as Holland (15 m) and Canada (26 m.). Canada is more directly comparable with Australia than most other countries. Both are large countries with federal political systems, resource-based economies that host a high number of multinational companies and which have their headquarters in other countries. Both have large areas which are sparsely populated. More than 60 percent of the population live in just five cities: Sydney, Melbourne, Brisbane, Perth and Adelaide. All of these cities are located on the coast in the southern half of Australia, yet are all separated by at least 500 miles. These cities are the capitals of the five mainland States. The Australian States were separate colonies until 1901 when they federated to become an independent country within the British Commonwealth. But these States still wield considerable power over many issues, including employment and industrial relations. Under the Australian constitution, the federal government has only limited industrial powers, and can make laws only on conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State (Australian Constitution, Section 51, xxxv).

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Having earlier rejected the notion of compulsory arbitration, the unions had changed their stance after some disastrous defeats during a wave of strikes in the early 1890s. The Conciliation and Arbitration Act 1904 encouraged employers to recognise unions registered under the Act, and empowered these unions to make claims on behalf of all employees within their coverage. Under the 1904 Act, then, unions could ensure that employers were called to court even if they were unwilling to negotiate. Once the court had made an "award" (a decision on pay or other terms of employment), its provisions were legally enforceable. Although employers were initially hostile to the federal Court of Conciliation and Arbitration established under the Act, they later found that they could use the procedures to their advantage and generally supported them. There has long been a high degree of State intervention in the Australian labor market, by contrast with Britain which has been characterised as having a voluntary approach and relatively little State intervention (see Bamber and Lansbury, 1993: ch. 2). The advent of arbitration was a significant departure from the British traditions which had been important in Australia before the 1890s, when the foundations of Australia's industrial relations were established.

The Political and Economic Environment Australian "labourism" (Hagan, 1981:45) differs from the British in at least three aspects. First, the 1904 Act and its provision for compulsory arbitration was a key element of Australia's initial "social contract". A second element was a law restricting immigration, thereby limiting the supply side of the labor market. The "white Australia" policy aimed to keep out Asians, in particular, who were seen as threatening union strength and union members' living standards. The third element involved creating a regime of tariffs to protect domestic products from the threat of cheap imports (Frenkel, 1990). All political parties have implemented protectionist policies. In this context, most manufacturing has been oriented to domestic markets. High tariff barriers, however, have not prevented the decline of manufacturing employment. According to surveys conducted by the Australian Bureau of Statistics (ABS), the proportion of the Australian labor force employed in manufacturing declined between 1970 and 1989 from approximately 26 percent to 16 percent. The tariff policy was originally designed to help create employment for an expanding population. It also enabled industrial tribunals to determine wages more on social and equity grounds than in accordance with productivity and market forces. Many protected industries, anticipating the chill winds of unrestricted competition, tenaciously lobbied governments to retain high tariff levels. The move of the Whitlam Labor government (1972-1975) to reduce tariffs by 25 percent "at a single stroke", was strongly criticised by manufactur-

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ers as inducing more imports, and by unions as leading to increased levels of unemployment. Australia is a welfare State which provides unemployment benefits, for example, to a greater extent than Japan. Nevertheless, Australia's welfare arrangements are less developed than those in most Western European countries. Since federation, conservative political parties have generally dominated federal government. However, there were reformist post-war Labor governments in the 1941-1949 and 1972-1975 periods. The Australian Labor Party (ALP), formed by unions in 1891, has not surprisingly been more sympathetic to union interests. Traditionally the unions have seen wage determination via arbitration as a more immediate priority than lobbying more widely, for instance, for improved social services. In the Labor government elected in 1983, the Prime Minister Bob Hawke was a former President of the Australian Council of Trade Unions (ACTU) and several other ministers also held senior union posts before their entry into parliament. A feature of government and union policy during this period has been their broader strategic focus and in particular their commitment to improved social services and benefits. In contrast with the earlier Whitlam Labor government, the post-1983 Hawke-Keating Labor government has sought more gradual tariff reductions and to stimulate competition. The lengths to which government should go to encourage exports and competition is subject to fierce debate in the 1990s.

Relevant Laws In 1988 the Hawke Labor government replaced the Conciliation and Arbitration Act 1904 with the Industrial Relations Act 1988. In most respects, the new act is similar to its predecessor, which had been extensively amended since 1904. Federal unions generally register with the Industrial Registrar to gain access to arbitration and to enjoy full legal status. There are also registration requirements for employers and employers' associations, but registration is more significant for unions since it provides unions with an important platform. The act prescribes that a union will not be registered if there is already another in existence to which employees can "conveniently belong". While this has helped to reduce inter-union disputes, it has also inhibited the development of new unions (e.g., specific enterprise unions) and has helped preserve some whose traditional membership areas have declined. The arbitration system includes both federal and State industrial tribunals, often known as industrial commissions. The federal Court of Conciliation and Arbitration used to have arbitral and judicial functions. Since 1976, the industrial division of the federal court has administered the judicial provisions of the Act while the Australian Industrial Relations Commission (the commission) or its predecessors have carried out non-judicial functions. These changes of

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functions were implemented following the "Boilermakers" Case (1956) in which the High Court ruled that, under the "separation of powers" doctrine in the constitution, arbitral and judicial functions could not be carried out by the same tribunal. This requirement does not apply to the State industrial tribunals which administer awards in each State, covering approximately half the workforce. Federal awards which cover approximately a third of the workforce tend to set the pattern for the State awards, so that a high degree of uniformity has emerged despite the multiplicity of tribunals. Although the commission is empowered to intervene only in disputes extending to more than one State, most important cases fulfill this requirement or can be seen as doing so. Either party to a dispute may refer a case to the commission, or the latter may intervene of its own accord "in the public interest". Thus, the commission's powers have become more extensive than originally intended. Some States have struggled to prevent the erosion of their "rights"; nevertheless, there has been a continuing tendency towards more federal involvement in labor-management relations.

The Main Actors A significant aspect of Australia's economic structure is the heavy concentration of power in a small number of large enterprises: a few firms dominate the economy. A comprehensive survey of Australian workplaces, across most sectors of the economy with over four employees, found an uneven distribution of employees. Large workplaces, with 500 or more employees, accounted for only 1 percent of workplaces but they employed 24 percent of the workforce. At the other end of the scale, 75 percent of the sample of workplaces had 5-19 employees, but they covered only 23 percent of the workforce (Callus et al., 1991:19) Large firms generally employ their own specialists in human resource management (HRM) and industrial relations. Small businesses generally do not employ their own specialists. When they do use such specialists, they tend to rely on employers' associations.

Employers' associations The early apparent strength of unions in Australia encouraged the development of employers' associations and led them to place greater emphasis on labormanagement issues than their counterparts in some other countries. However, there is great variation in the size and complexity of employers' associations from small, single-industry bodies, to large organizations which attempt to cover

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all employers within a particular State. In 1977, the Confederation of Australian Industry (CAI) was established as the major national employers' body, almost 50 years after the formation of the ACTU (Plowman, 1980:258). Partly because of their dissatisfaction with the apparent inability of the CAI to represent the needs of its large and diverse membership, in 1983, a group of about 80 major enterprises which have grown into a powerful lobby group, established the Business Council of Australia (BCA). Also, since the mid-1980s there have been several important departures from the CAI. These included important affiliates such as the Metal Trades Industry Association (in 1987) and the Australian Chamber of Manufacturers (in 1989). One repercussion has been the airing of differences between employers. In an attempt to present a more united front, therefore, in 1992 the CAI merged with the Australian Chamber of Commerce to form a new organisation: the Australian Chamber of Commerce and Industry. Unions The establishment of the legally-based arbitration system in the early years of this century encouraged the rapid growth of unions. By 1921, approximately 50 percent of the Australian labor force was unionised. Union density has fluctuated. During the depression of the early 1930s it dropped to little over 40 percent. In the 1940s there was a steady increase in density and a peak of 65 percent was achieved in 1953. Union density has suffered a steep decline since the 1970s. In 1976, 51 percent of all employees were in unions (56 percent males; 43 percent females). By 1990 this had dropped to 41 percent (45 percent males; 35 percent females) (ABS, 1990b). (This is in a similar league as Britain's and Canada's union density.) Why has Australia's union density decreased? Contributing factors have been the relative decline in employment in manufacturing (a bastion for unions), and the strong growth in the service sector (approximately 68 percent of the workforce), which is generally more difficult to unionize. Significant growth in part-time and casual employment has been an additional factor, as such workers are also difficult to unionise. Australian unions are small by international standards; the current 295 unions vary in size from fewer than 50 members to 200,000. Around 34 unions enroll 30,000 or more members and this represents approximately 73 percent of total union membership. As in the USA and Britain, unionism originally developed on a craft basis, but with the growth of manufacturing, general and industrial unions also grew. Unlike its predecessor, the Industrial Relations Act 1988 stipulated that unions seeking registration must have a minimum of 1,000 members and be industry-based. This innovation was an attempt to reduce the proliferation of small, occupationally-based unions. Existing unions with under 1,000 members must make a case before the Registrar in an attempt to maintain

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their registration. In 1991 the federal government amended the Act to facilitate union mergers and further increase the minimum size of federal unions to 10,000 members. The ACTU is the main confederation for both manual and non-manual unions. It was formed in 1927 and currently embraces approximately 150 unions and covers around 95 percent of all unionists. The high inclusiveness of the ACTU is linked to the decision of two white-collar union confederations to join forces with the ACTU. The Australian Council of Salaried and Professional Associations (ACSPA) joined the ACTU in 1979 and the Council of Australian Government Employee Organisations (CAGEO) followed in 1981. The ACTU's considerable influence over its affiliates was reflected at ACTU congresses and conferences throughout the 1980s, when nearly all the executive recommendations were endorsed (Davis, 1988:120). Officers of the ACTU also play key roles in the presentation of union cases before the commission and in the conduct and settlement of important industrial disputes. As in the USA and UK, then, there is now only one main central union confederation. This is in contrast to many western European countries which have several confederations. Nevertheless, in each of the States, trades and labor councils also play a significant role in industrial relations. Although the State trades and labor councils are formally branches of the ACTU, they generally have a much longer history than the ACTU and display some independence and considerable power in their localities. (This is unlike trades councils in England and Wales, which have a much smaller role.) The basic unit of organization for unions is the branch, which may cover an entire State or a large district within a State. Workplace organization tends to be informal, but shop stewards' committees have developed in recent years among key groups of manual workers and, especially in the public sector, among non-manual staff too. In another contrast with the UK, however, the role and power of most workplace union stewards (often known as delegates) is relatively undeveloped in Australia, as in New Zealand. In view of the centralized industrial relations decision making, most unions are more dependent on their full-time officials at State and federal levels; most advocacy has been conducted centrally, rather than at the workplace.

Government As the federal government's industrial relations role is formally restricted by the constitution, the government has used fiscal and monetary tools to influence industrial relations. It has also taken advantage of the High Court's re-interpretation of the constitution in an attempt to extend its powers in the industrial arena. The Court's re-interpretations have periodically given rise to inconsistencies and

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uncertainties and have served to restrict some of the commission's powers, as well as to increase others. The lack of legislative power, particularly in regard to pay policy, has frustrated federal governments of all political persuasions. During the period of the Fraser conservative government (1975-1983) there were occasional strong exchanges between the government and the commission. For instance, in 1977 the government argued that its economic policy would be prejudiced unless the commission's decisions on pay were framed in accordance with government wishes. The commission responded that it was "not an arm of the government's economic policy [but] an independent body [...] required under the Act to act according to equity, good conscience and the substantial merits of the case" (Isaac, 1977:22). The bicameral legislature, in which the senate has the power to review, amend or reject bills proposed by the House of Representatives, provides a further restraint on the powers of the federal government, when it lacks a majority in the senate. Federal, State and local governments are also major employers in their own right, employing approximately a quarter of the labor force. Their policies as employers are therefore significant. The 1972-1975 Whitlam Labor government sought to establish pace-setting conditions for its employees and to encourage the extension of union coverage. The election of the conservative coalition government in 1975 brought considerable change. The conditions of public servants began to fall behind those prevailing in the private sector, and legislation was introduced which strengthened the ability of the government as an employer to lay oif or dismiss workers if it chose. A further measure was the cancellation of the system whereby members' dues in the two largest public sector unions had been deducted directly from wages. The post-1983 Labor government repealed those laws regarded as least palatable by the unions and restored the automatic payroll deduction of union dues. Public sector employees failed however to regain their status as pace-setters, so there has been a growing disparity in remuneration for public and private sector employees.

Labor-Management Processes Although federal awards have precedence, the State systems of industrial relations are still important. Problems arising from overlapping jurisdiction of the State and federal tribunals have long been a source of concern to reformers, but changes have been difficult to achieve. In effect, there remain seven separate systems of industrial regulation; in addition to the federal system, each of the six States has its own legislation and its own distinctive style. The federal arbitration system is compulsory in two senses. First, if activated, it requires the parties to submit to a mandatory procedure for presenting their

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arguments. Second, tribunal awards are binding on the parties. Awards specify minimum standards of pay and conditions which an employer must meet or else face legal penalties. It is necessary to distinguish between the formal arbitration provisions and the way they work in practice. In reality, there is a considerable amount of direct negotiation between the parties. Agreements directly negotiated between employers and unions may co-exist with or take the place of arbitrated awards. They are known as "consent awards" and may deal comprehensively with the terms and conditions of work in particular workplaces or supplement existing agreements. Following a survey of 60 major unions, Niland (1976:83) reported that 80 percent of them increasingly applied direct negotiation procedures in dispute resolution. Some 30 percent were negotiating solely within the arbitration system, 20 percent were operating completely outside the system, while 50 percent were using a mixed approach. These findings provided support for an earlier study by Yerbury and Isaac (1971:421-452) which reported a substantial increase in the relative importance of directly negotiated agreements in the federal and State jurisdictions. These analysts noted the emergence of a "peculiar hybrid of quasi-collective bargaining" which, they argued, could well become the dominant feature of industrial relations in Australia.

How Effective are these Labor-Management Processes? One argument for introducing compulsory arbitration had been to render strikes unnecessary. The "rule of law" provided under arbitration was supposed to displace the "rude and barbarous process of strike and lockout". For many years, the Conciliation and Arbitration Act rendered strikes illegal and subject to penalties. Although this provision was removed in 1930, Australian workers have not been granted the formal right to strike; they generally remain liable to dismissal and action for damages incurred by employers. Another "sanction" sometimes used by the tribunals has been to deregister a union which strikes in defiance of a tribunal order to return to work. In practice, however, union deregistration is difficult and those few unions affected have usually been re-registered after making a suitable apology. One of the main effects of arbitration has been to shorten the duration of industrial stoppages. Although precise international comparisons of stoppage statistics are notoriously difficult (see Bamber and Lansbury, 1993, Appendix), Australia has had a reputation for being among those countries with a relatively high number of working days "lost". In an analysis of 20 OECD countries, Australia came joint sixth (along with the Irish Republic) with an annual average of 900 working days lost per 1,000 employees in selected industries between

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19

1979 and 1988. The five countries with an apparently higher stoppage propensity were New Zealand (1,140), Canada (1,050), Spain (1,020), the UK (990) and Greece (940) (Bird, 1990:611). However, before the USA changed the threshold for the inclusion of disputes in its series of industrial stoppage statistics in 1981, the USA also appeared to lose a similar number of days as Australia (Creigh and Makeham, 1982:140). A relatively adversarial style of industrial relations has prevailed in Australia, then, in comparison with countries such as Japan (20), Germany (70) and Sweden (320), which all appear to lose significantly fewer working days (as shown in parentheses). Certainly, there is much coverage of industrial disputes by the Australian media (e.g., see Blackmur, 1989:163). Conflict is news, while industrial peace is not news. This reinforces the view that Australian workplaces are stricken with industrial conflict and mutual antagonism between management and workers. However, a thorough survey of workplaces suggests that nearly three-quarters of all workplaces with over four employees have never experienced any type of industrial action (Callus et al, 1991:254). As the Minister for Industrial Relations, Senator Peter Cook, put it when launching the survey results: In the year preceding the survey (1988-89), only 12 percent of workplaces had been involved in some form of industrial action. In most cases, these were stop-work meetings, including information sessions and the like as well as stoppages per se. Moreover, whether one relies on the account of managers or union representatives, managementemployee relations are generally perceived as being reasonably harmonious. About three-quarters of general managers and more than half of all union delegates rated industrial relations (in their workplace) as being very good (Cook, 1991:4).

Since 1983, the Labor government has generally striven to promote more peaceful industrial relations. Average working days lost per 1000 employees have been halved, across all industries. Since the end of 1982, the annual number of working days lost has been less than 300 per 1,000 employees, and in the main, annual averages have ranged between 200 and 250 (ABS, 1990a). Beggs and Chapman (1987:148) have argued that, while changing macroeconomic conditions have played a part in this absolute and relative decline in the impact of industrial stoppages, so too has the ALP-ACTU Accord (see below). Besides industrial stoppages, there are many other expressions of industrial conflict including accidents, absenteeism, labor turnover, working without enthusiasm, working to rule and bans (Hyman, 1989:35). There is much less comparative data available on such forms of conflict, even though most large employers lose many more working days through accidents and absenteeism than through formal stoppages. A "ban" is "an organised refusal by employees to undertake certain work, to use certain equipment or to work with certain people" (Sheehan and Worland, 1986:21). There is some evidence to suggest an increased implementation of bans in the 1980s. As the decline in the incidence of industrial stoppages

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correlates with a rise in the number of bans, perhaps the latter are seen as an alternative expression of industrial conflict. "Bans minimise loss of pay and may make it more difficult for employers to apply legal sanctions against unions" (Frenkel, 1990:14). But, even more than with strikes, it is difficult to secure reliable data on bans.

Industrial Democracy and Employee Participation An industrial democracy movement attracted much attention in the early 1970s, but interest waned with the growth in unemployment under the conservative federal government of 1975-1983. After 1983, however, there was renewed interest; the Accord stressed that "consultation is a key factor in bringing about change in industry [...] (at) industry, company and workplace level" (ALP/ACTU, 1983:9). The Labor government supported the ACTU at the commission in its claim for improved job protection standards to be inserted into workers' awards. This led to the commission's Termination, Change and Redundancy Decision (ACAC, 1984). Employers were required to consult their employees and unions before introducing major changes to work methods or to organizational structure. Where redundancies were contemplated, the length of notice was increased. Unions welcomed this decision. But many employers were less enthusiastic, seeing the decision as increasing costs and impinging on managerial prerogatives. Some employers have forged agreements which have built on the employee and union rights determined by the commission. For example, Australia's major (public sector) supplier of telecommunications services, Telecom, made a Technological Change Agreement which commits its managers to provide information to unions at the contemplative stage and to seek union participation in the process leading up to a decision. The management and unions comment that the agreement facilitated the introduction of new technology in this enterprise during the 1980s (Davis and Lansbury, 1988:558). The Labor government has maintained a general interest in employee participation, while eschewing plans for legislation. It welcomed the CAI/ACTU 1988 Joint Statement on Participative Practices which aimed to stimulate higher levels of participation and provided guidelines on implementation. The commission's decisions since the early 1980s have also reflected the policies of government, unions and employers for more consultation and employee participation.

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Equal Opportunities Increased attention has been paid to women in the workplace as female participation in the workforce has increased. In 1961 women comprised approximately 25 percent of the workforce; by 1981 this had increased to 37 percent and by 1990 it reached 41.5 percent (Eccles, 1982:316; Women's Bureau, 1990:1). The federal Affirmative Action (Equal Employment Opportunity for Women) Act 1986 covers all private sector employers with one hundred or more employees, and obliges employers to take eight specific steps designed to remove discrimination towards women and promote equality in employment. The evidence so far indicates uneven compliance (Davis and Pratt, 1990:64-65). Women's earnings on average have remained below male earnings. However, such matters as childcare, maternity and paternity leave, equal employment opportunity, affirmative action, and sexual harassment are increasingly seen as being in the industrial relations and HRM arena, rather than exclusively as women's issues. Further, forecasts of shortages of labor in the future are inducing some employers to improve childcare and related conditions, in order to attract and retain women workers. Many Australian employers have responded to labor shortages by employing migrant workers. Before 1949, most migrants came to Australia from the British Isles. Since then, Mediterranean countries, eastern Europe and south-east Asia have also been sources. In relative terms, the Australian workforce is even more of a multi-cultural mixture than the American. In 1981, 38 percent of all those engaged in Australian manufacturing and 30 percent of those in construction were born overseas (Lever-Tracy and Quinlan, 1988:1). This mix of languages and cultures poses a challenge for employers, especially when trying to effect two-way communication on health and safety procedures and hazards, or on new technologies and methods of working (Quinlan and Bohle, 1991: ch. 12).

Centralized Pay Determination The arbitration system has induced a centralization of pay determination. This has been achieved by the increasing influence of the commission over key wage issues, despite the constitutional limitations. Its predecessor, the federal Court of Conciliation and Arbitration initially became involved in fixing a minimum wage in 1907 when it described the "basic wage" as intended to meet "the normal needs of an average employee, regarded as a human being living in a civilised community". The basic wage was set at a level sufficient to cover the minimum needs of a single income family unit of five and became the accepted wage for unskilled work. A custom of pay differentials (margins) for skills

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developed in the 1920s, based largely on traditional differentials in the metal and engineering trades. The Court thus began to regulate wages and differentials through its decisions on the basic wage and margins at the national wage case hearings. These are a much publicized ritual and occur at approximately annual intervals. The employers, unions and governments each make submissions to the commission, which eventually hands down a decision. This usually determines a change to pay or conditions that soon applies to nearly all employees throughout Australia. In 1967, the commission discontinued the custom of basic wage and margins in favor of a "total" award. It also introduced a national minimum wage, representing the lowest wage permissible for a standard work week by any employee. During the early 1970s, the commission sought to adjust the relative structure of award wages in different industries and to reduce the scope of "over-award" increases by attempting to bring formal awards more closely into line with actual earnings. But by 1973-1974, the contribution of national wage cases to total wage increases had declined to approximately 20 percent as unions bargained directly with employers for large "over-award" payments (Howard, 1977:271). Collective bargaining had therefore become a dominant force in wage increases, its leading settlements soon "flowing on" to most of the economy (Isaac, 1977:14). Faced with the dual problem of rapidly rising inflation and unemployment, the Labor government moved to restore the commission's authority (Lansbury, 1978:611-624). In 1974, both the federal government and the ACTU sought the introduction of automatic full cost-of-living indexation of wage increases, against the opposition of non-Labor State governments and private-sector employers. Between 1975 and 1981, partial rather than full indexation was the norm, but the commission abandoned indexation in 1981 (Dabscheck, 1989:28). A round of direct negotiations followed. Some unions won large pay increases and these began to flow on to other sectors. At the same time, there was a sharp fall in demand for goods and services, while unemployment rose. The election of a Labor government in 1983 returned the commission to a powerful role in pay policy. The Accord agreed between the ALP and the ACTU before the election included a return to centralised wage determination, with guidelines based on wage adjustments for price movements and, at longer intervals, for movements in national productivity (Lansbury, 1985:224). This approach was reflected by the commission in 1983, which reintroduced wage indexation. However, there was a requirement that each union should pledge to make no "extra claims" in return for receiving indexation. To the surprise of many commentators, most unions accepted this requirement, and there was little movement in wages on top of nationally determined pay rates. Those unions seeking to press for wage increases outside the Accord found themselves

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isolated and their campaigns were usually unsuccessful. The pilots were a classic example; they were resoundingly defeated in a controversial strike in 1989 (Bamber and Watson, 1991:10).

Some Trends Although opinion has been divided over the effectiveness of the Accord, two researchers have argued that it was responsible for generating an extra 313,000 jobs between 1983-1989 (Chapman and Gruen, 1990:16). This represented a 4 percent rise in employment and a 2 percent reduction in unemployment. On this reasoning, the Accord produced about one-fifth of the 1.6 million new jobs during this period. A major factor was, they estimated, that real wages fell by 10 percent between 1983-1989. This estimate sparked debate within the union movement, with some arguing that unions should seek to reverse the fall in real wages. ACTU officials contended, however, that the impact of the fall in real wages was more than offset by increased employment (thereby increasing household incomes), tax reform, improved superannuation and a raft of more generous social welfare provisions. They claimed that such innovations had led to an improvement in living standards. Officials also pointed to the greater influence by union representatives over economic, industry and social policies. The Accord included jointly-agreed policies on prices and non-wage incomes, industrial law, social security, occupational health and safety, education, health and Australian government employment. After 1983, the Accord became identified as a regular process of decision making involving senior ACTU and government officials. Indeed, it provided the framework for the development of union and government policies on economic, industrial and social matters. With regard to pay, the original 1983 Accord (which later became known as Accord Mark I) envisaged federal government support for full wage indexation. However, due to the severe economic crisis of 1985-1986, the government abandoned its commitment on this. In its 1987 national wage case decision, the commission introduced a dual system of wage adjustments which depended, in the main, on unions and employers agreeing to improve efficiency in their industry or workplaces. To implement the new approach, the commission drew attention to a need for supportive government policies on tax reform, the spread of superannuation and more consultation. The following year, wage increases were conditional on discussion of "structural efficiency" which resulted in a mixture of industry-byindustry and employer-by-employer productivity negotiations. These national wage case decisions reflected the central role of the commission, while also

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incorporating moves toward devolved enterprise agreements between employers and unions. Reaffirming these previous national wage case decisions, in 1989 the commission elaborated on the items which unions and employers might consider in their negotiations to improve efficiency. Among their suggestions were issues such as overtime, unsocial hours "penalty rates", flexible hours, part-time and casual employment, changes in staffing and the development of consultative procedures. Thus the 1989 decision provided the opportunity for unions and employers to address issues which had long bedevilled performance, but had been widely regarded as immutable. In 1990, federal and State governments, unions and employers each submitted at national wage case hearings that the commission should permit wage increases based on enterprise bargaining. In addition the federal government and ACTU asked the commission to implement their February 1990 agreement (Accord Mark VI). This involved a further 3 percent increase in employers' superannuation contributions and a $12 per week pay increase. Most observers expected that the commission would endorse these three developments, as during the previous eight years it had usually endorsed the main elements of the earlier phases of the Accord (Marks I-V). However, in its April 1991 national wage case decision, the commission did not support a greater reliance on enterprise bargaining or another 3 percent superannuation via awards; rather, it called for a national conference on superannuation. (It saw this as necessary to consider the issue of superannuation for casual, part-time and short-term employees, and the longer-term agenda for retirement incomes more generally.) Moreover it awarded a conditional 2.5 percent pay increase, rather than $12. The unions had sought a flat increase to benefit the lower paid, rather than a percentage increase which favors the higher paid. The April decision was particularly controversial. It was the first such decision rejected by the ACTU and, in effect, by the federal government. In relation to public sector employees, for example, the federal government stated that it would implement the Accord Mark VI, rather than the commission's decision. The ACTU condemned the commission's decision and encouraged its affiliates to embark on campaigns to win pay increases by negotiating directly with employers. Many leaders in government, employer and union circles are arguing for more enterprise bargaining, though they do not agree on how it should be implemented. Such leaders are increasingly critical of the commission. There is a growing chorus calling for its abolition or a diminution of its role and powers. Attacks on the commission are not new. Its popularity has waxed and waned since 1904. None the less, the commission and its predecessors have proved adaptable and resilient. It would be premature to write its obituary. In October 1991, the commission made a further decision which demonstrated its flexibil-

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ity. This decision may prove to have been an important turning point insofar as it: encouraged further productivity bargaining at the enterprise level; did not identify minimum or maximum pay increases; required that all agreements still had to be approved by the commission; and limited its own role in such cases to conciliation (not arbitration).

Industrial Relations Reform Since the mid-1980s, proposals to change Australia's labor-management arrangements can be divided into three camps. The first has advocated the maintenance of the centralised system. The second has proposed radical decentralization, while the third has argued for greater decentralization within the traditional centralized framework. First, the Hancock Committee (1985) argued for the retention and consolidation of the existing system with some limited restructuring. Hancock argued that the centralised system facilitated the implementation of national incomes policies, and was an important factor in the wider struggle to reduce unemployment and inflation. The ACTU's comprehensive report, Australia Reconstructed (ACTU/TDC, 1987), followed the Hancock Committee in its support for the retention of centralised wage determination. However it also argued that incomes policy should be more adequately coordinated with policies on taxation and social welfare and that it should be concerned with productivity, international competitiveness and investment. In particular, pay arrangements should foster training and skill enhancement. Australia Reconstructed was inspired by examples from Scandinavia and Austria. Its ambition was captured in its introductory comment that "we are about nothing less than the reconstruction of Australia" (1987: v). Second, the BCA's (1989) report criticized the centralized system, arguing that the key to improved competitiveness was a shift to enterprise-based negotiations. It advocated an even more radical change to existing union structures, that enterprise unionism should replace occupational and industry unionism. Further, it argued that the traditional focus on adversarial style industrial relations should be abandoned and replaced by an employee relations "mindset" with line managers taking on more responsibility for HRM (Hilmer, 1989:201-221; see also Sutcliffe and Sappey, 1990:257), which would stress the mutuality of employee and management interests, and the virtues of individualism and flexibility. The BCA stirred a hornet's nest. Its critics held that the report reflected a return to "unitarism" in which "management knows best" (Dabscheck, 1990:119). Niland's (1989) Green Paper for New South Wales argued in similar vein to the BCA for a shift towards more enterprise bargaining, so that more responsibil-

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ity would rest on workplace supervisors and union delegates. Employers were vigorously opposed to Niland's suggestion that workers should have the legal right to engage in industrial disputes over "interests" (e.g., a general pay claim). Unions campaigned against Niland's recommendations to increase the size of penal sanctions and to encourage the formation of enterprise unions. Nonetheless, much interest will be taken in the experience of New South Wales. Its government has moved to enact legislation based on Niland's recommendations. It will be seen as a prototype for the more decentralised approach. A third way has been suggested by some, such as a prominent employers' organization, the Metal Trades Industry Association. It has proposed that the commission should continue to play a pivotal role. National wage cases would continue to examine economic and industrial relations matters and, on the basis of conclusions drawn, set the framework for pay bargaining. Within this framework, however, there would be considerable scope for bargaining at the industry and enterprise level. This third approach has become known as "managed decentralism" (McDonald and Rimmer, 1989:111; Evans, 1989:1). Recently, a novel development has been the involvement of several employers and unions in "single union deals". The new ICI chemical works at Gladstone, central Queensland, is a "leading edge" example. ICI established "single status" employment conditions for all categories of employee, blue collar and white collar. ICI awarded exclusive coverage to one union, the Federation of Industrial, Manufacturing and Engineering Employees. Such exclusive union jurisdiction is the norm in the USA and became more usual in new UK establishments since the 1970s. Yet even in the early 1990s such innovations were controversial in Australia.

Conclusions In recent years, considerable economic turbulence and technological change has been matched by change in the political arena and in the complexion of the workforce. This has been most obviously reflected in the rapid growth in the numbers of women and migrant workers, and in the related growth of part-time working. Contextual change therefore provides the backdrop to the debate on industrial relations reform. Industrial relations in Australia have long involved collective bargaining, as well as conciliation and arbitration. Much workplace-level collective bargaining occurs without recourse to the tribunals. Even when the parties seek conciliation, the tribunals often encourage them to engage in bargaining, instead of, or before, proceeding to arbitration. Since the mid-1980s, there has been extensive debate on the appropriate role for the tribunals and for bargaining. Much discussion has focussed on the

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relative merits of centralization versus decentralization. By the early 1990s there was a broad consensus on the needs for better skill formation, the overhaul of existing award arrangements and greater devolution, although there was disagreement about the pace of change and the extent to which all this should occur within a centrally-determined framework. Turning to the major players, federal and State governments are increasingly preoccupied with microeconomic reform and broader economic issues. In terms of procedures, both sides of politics accept the need for more devolution. The most obvious difference of approach is that Labor governments support an important and integral role for unions in industry and enterprise decisionmaking, while conservative governments aim to limit union power and influence. For this reason changes in federal and State government continue to have considerable significance for the shape and conduct of industrial relations. Employers are concerned with their economic performance, especially in the face of increasingly competitive markets. This is prompting many to give a higher priority to HRM and to seek more of an enterprise focus in industrial relations, yet some are also concerned about the likelihood of increased costs and disputes following the removal of centrally-imposed wage restraint. Lastly, the ACTU has accepted the desirability of a greater workplace focus, believing that this will improve the economic performance of the nation and of its enterprises (and thereby provide scope for improvements in workers' pay and conditions). Contemporary union leaders are more conscious of such links than their predecessors. Nevertheless they are also aware of the need to minimise unemployment, protect low-paid workers, rebuild union membership and to restructure the union movement, if it is to thrive in the twenty-first century. In their quest for these goals, most unions aim to retain some degree of central regulation.

Acknowledgement Jan Nixon has patiently and efficiently managed the word processing of several drafts of this chapter, which among other sources, draws on earlier work that we have conducted with Russell Lansbury. We are grateful to both of them as well as to the book's editors and several other colleagues who commented on earlier drafts.

References A B S (1990a) "Industrial Disputes, Australia". Canberra: Australian Bureau of Statistics, Cat. No. 6322.0. A B S (1990b) "Trade Union Statistics, Australia". Canberra: Australian Bureau of Statistics, Cat. No. 6323.0.

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ABS (1990c) "Trade Union Members, Australia, August 1990". Canberra: Australian Bureau of Statistics, Cat. No. 6325.0. ACAC (1984) Termination, Change and Redundancy Case Decision, 2 August 1984. Melbourne: Australian Conciliation and Arbitration Commission. ACTU/TDC (1987) Australia Reconstructed. Canberra: Australian Government Publishing Service, for Australian Council of Trade Unions/Trade Development Council. ALP/ACTU (1983) "Statement of Accord by ALP and ACTU Regarding Economic Policy". Melbourne: Australian Labor Party-Australian Council of Trade Unions. Bamber, G. J. (1990) Flexible Work Organization: Inferences from Britain and Australia". Asia-Pacific Human Resources Management, 28, 3, 28-44. Bamber, G. J. and R. D. Lansbury (eds.) (1992) International and Comparative Industrial Relations. Sydney: Allen & Unwin/London: Routledge. Bamber, G. J. and Lansbury, R. D. (eds.) (1989) New Technology: International Perspectives on Human Resources and Industrial Relations. Sydney: Allen & Unwin; New York: Harper Collins; Concord, Mass: Bob Paul. Bamber, G. J. and K. Watson (1991) "The Prevention and Settlement of Industrial Disputes in Australian 'Essential Services'". Monograph, Geneva: International Labour Organisation¡Working Paper, Brisbane: Graduate School of Management, The University of Queensland. BCA (1989) Enterprise-based Bargaining Units: A Better Way of Working. Melbourne: Business Council of Australia. Beggs, J. J. and B. J. Chapman (1987) "Australian Strike Activity in an International Context: 1964-1985". Journal of Industrial Relations, 29, 2, 137-149. Bird, D. (1990) "International Comparisons of Industrial Disputes in 1988 and 1989". Employment Gazette, 98, 12, 609-613. Blackmur, D. (1989) "Industrial Conflict in the Public Sector: The Origins and Nature of the 1985 Queensland Electricity Dispute". Australian Journal of Public Administration, 48, 2, 163-176. CAI/ACTU (1988) Joint Statement on Participative Practices, Canberra: Australian Government Publishing Service, for the Confederation of Australian Industry and Australian Council of Trade Unions. Callus, R., A. Morehead, M. Cully and J. Buchanan (1991) Industrial Relations at Work: The Australian Workplace Industrial Relations Survey. Canberra: Australian Government Publishing Service. Chapman, B. J. and F. H. Gruen (1990) "An Analysis of the Australian Consensual Incomes Policy: The Prices and Incomes Accord". Canberra: Australian National University, Centre for Economic Policy Research, Paper No. 221. Cook, P. (1991) "Address" at the launch of Industrial Relations at Work: The Australian Workplace Industrial Relations survey at the Workplace Australia conference, Canberra: Department of Industrial Relations. Creigh, S. W. and P. Makeham (1982) "Strike Incidence in Industrial Countries: An Analysis". Australian Bulletin of Labour, 8, 3, 139-155. Dabscheck, B. (1989) Australian Industrial Relations in the 1980s. Melbourne: Oxford University Press. Dabscheck, B. (1990) "Industrial Relations and the Irresistible Magic Wand". In M. Easson and J. Shaw (eds.), Transforming Industrial Relations, 117-130. Sydney: Pluto.

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Davis, Ε. M. (1982) "Trade Unions and the Media in Australia". In K. Cole (ed.) Power, Conflict and Control in Australian Trade Unions, 15-34. Melbourne: Penguin. Davis, E. M. (1988) "The 1987 ACTU Congress: Reconstructing Australia?". Journal of Industrial Relations, 30, 1, 118-129. Davis, E. M. (1990) "The 1989 ACTU Congress: Seeking Change Within". Journal of Industrial Relations, 32, 1, 100-110. Davis, E. M. and R. D. Lansbury (eds.) (1986) Democracy and Control in the Workplace. Melbourne: Longman Cheshire. Davis, E. M. and R. D. Lansbury (1988) "Consultative Councils in Qantas and Telecom". Journal of Industrial Relations, 30, 4, 546-565. Davis, E. M. and V. Pratt (eds.) (1990) Making the Link: Affirmative Action and Industrial Relations. Canberra: Australian Government Publishing Service. Deery, S. J. and D. H. Plowman (1991) Australian Industrial Relations (3rd edition). Sydney: McGraw Hill. Department of Employment and Industrial Relations (1986) Industrial Democracy and Employee Participation. Canberra: Australian Government Publishing Service. Dufty, N. F. and R. E. Fells (1989) Dynamics of Industrial Relations in Australia. Sydney: Prentice-Hall. Easson, M. and J. Shaw (eds.) (1990) Transforming Industrial Relations. Sydney: Pluto. Eccles, S. (1982) "The Role of Women in the Australian Labour Market". Journal of Industrial Relations, 24, 3, 315-336. Evans, A. C. (1989) "Managed Decentralism in Australia's Industrial Relations". Eleventh Sir Richard Kirby Lecture, University of Wollongong. Sydney: Metal Trades Industry Association. Ford, G. W., J. M. Hearn and R. D. Lansbury (eds.) (1980) Australian Labour Relations: Readings. Melbourne: Macmillan. Ford, G. W. and D. Plowman (eds.) (1983) Australian Unions. Melbourne: Macmillan. Frenkel, S. (1990) "Australian Trade Unionism and the New Social Structure of Accumulation". Paper presented to the Asian Regional Congress, International Industrial Relations Research Association, Manila. Frenkel, S. and D. Peetz (1990) "Enterprise Bargaining: the BCA's Report on Industrial Relations Reform". Journal of Industrial Relations, 32, 1, 69-99. Hagan, J. (1981) The history of the ACTU. Melbourne: Longman Cheshire. Hancock, K. J. (1985) Australian Industrial Relations Law and Systems: Report of the Committee of Review. Canberra: Australian Government Publishing Service. Hilmer, F. (1980) New Games, New Rules: Work in Competitive Enterprises. Sydney: Angus & Robertson. Howard, W. A. (1977) "Australian Trade Unions in the Context of Union Theory". Journal of Industrial Relations. 19, 3, 255-273. Hyman, R. (1989) Strikes (4th edition). London: Macmillan. Isaac, J. E. (1977) "Wage Determination and Economic Policy". The Giblin Memorial Lecture. Melbourne: University of Melbourne, Faculty of Economics. Isaac, J. E. (1989) "The Arbitration Commission: Prime Mover or Facilitator". Journal of Industrial Relations, 31, 3, 407-427. Kirby, M. (1989) "The Removal of Justice Staples and the Silent Forces of Industrial Relations". Journal of Industrial Relations, 31,3, 334-371.

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Kitay, J. and P. McCarthy (1989) "Justice Staples and the Politics of Australian Industrial Arbitration". Journal of Industrial Relations, 31, 3, 310-333. Lansbury, R. D. (1978) "The Return to Arbitration: Recent Trends in Dispute Settlement and Wages Policy in Australia". International Labour Review, 117, 5, 611-624. Lansbury, R. D. (1985) "The Accord: A New Experiment in Australian Industrial Relations". Labour and Society, 10, 2, 223-235. Lever-Tracy, C. and M. Quinlan (1988) A Divided Working Class: Ethnic Segmentation and Industrial Conflict in Australia. London: Routledge & Kegan Paul. McDonald, T. and M. Rimmer (1989) "Award Restructuring and Wages Policy". Growth, Vol. 37, 111-134. National Wage Case (March 1987). Melbourne: Dec 110/87 M Print G6800. National Wage Case (August 1988). Melbourne: Dec 640/88 M Print H4000. National Wage Case (August 1989). Melbourne: Dec 530/89 M Print H9100. National Wage Case (April 1991). Melbourne: Dec 300/91 M Print J7400. Nicholls Society, H. R. (1986) Arbitration in Contempt. Melbourne: H. R. Nicholls Society. Niland, J. R. (1976) Collective Bargaining in the Context of Compulsory Arbitration. Sydney: New South Wales University Press. Niland, J. R. (1989) Transforming Industrial Relations in New South Wales: A Green Paper. Vol. 1. Sidney: Department of Industrial Relations and Employment, New South Wales Government. Plowman, D. H. (1980) "Employer Associations: Challenges and Responses", in G. W. Ford, J. M. Hearn and R. D. Lansbury (1980: 248-278). Quinlan, M. and P. Bohle (1991) Managing Occupational Health and Safety in Australia: A Multidisciplinary Approach. Melbourne: Macmillan. Sheehan, B. and D. Worland (1986) Glossary of Industrial Relations Terms. Melbourne: Industrial Relations Society of Victoria. Sutcliffe, P. and R. Sappey (1990) "Human Resource Management and Industrial Relations: Towards a Framework for Analysis", in G. Griffin (ed.), Current Research in Industrial Relations: Proceedings of the Fifth A1RAANZ Conference, 247-259. Sydney: Association of Industrial Relations Academics of Australia and New Zealand. Women's Bureau (1990) Women and Work. Canberra: Department of Employment, Education and Training. Yerbury, D. and J. E. Isaac (1971) "Recent Trends in Collective Bargaining in Australia". International Labour Review, 110, 421-452.

Austria Franz Traxler

Introduction Industrial relations in Austria is among the most cooperative and corporatist systems in the Western world. The cooperative character of Austria's industrial relations is manifested in the fact that the level of industrial conflict is extremely low both in terms of involvement and volume. Unions continuously synchronize their demands with the requirements of macroeconomic development in terms such as growth and price stability. In addition, industrial relations are corporatist in two ways.'First, the structure of Austria's industrial relations is characterized by the predominance of a few principal associations whose domains are very encompassing and whose internal goal formation is extraordinarily centralized. Second, the system's functioning is well integrated into the overall process of public policy making. The principal interest associations substantially participate in all economic and social matters of public policy. This close cooperation between associations and the State enables an effective concertation of all policy arenas relevant to macroeconomic management. As comparative studies demonstrate (e.g., Schmitter, 1981; Cameron, 1984), this corporatist concertation decisively contributed to Austria's high economic performance relative to most other OECD countries during the 1960s and 1970s. Austria was especially successful in optimizing economic growth, price stability, and employment in face of the world-wide risks of stagflation and unemployment in the 1970s (Schmidt, 1986). After some difficulties in economic restructuring in the mid-1980s (most notably expressed in a rise of public debt), Austria again outperformed most OECD countries with regard to the main macroeconomic indicators since 1988. Although a full investigation into the preconditions for this unique institutional arrangement (called "social partnership" in Austria) is beyond the scope of this paper, its most important elements are mentioned here: Historical background. After the breakdown of the Nazi Regime in 1945 there was the opportunity to redesign political institutions. Most notably in this context, all relevant political forces of the reconstituted Austrian republic saw the enduring economic crisis in the inter-war period and the fierce class conflict resulting in civil war in 1934 as the decisive conditions that had made it possible for Nazi Germany to occupy Austria in 1938. Hence, there was a strong tendency among these forces to reconstruct political institutions in such a way as

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to guarantee cooperative relationships and combine all strengths needed to attain economic prosperity (Traxler, 1982). Composition of domestic capital. Leaving aside the remarkable sector of State-controlled nationalized enterprises, 2 domestic private capital suffers from a high degree of fragmentation. With the exception of nationalized and foreignowned firms, Austria's capital is very small by international standards.Characteristically, no large multinational enterprise originates in Austria. Domestic firm's small size makes associations especially important because small firms more than large ones depend on collective efforts with regard to both the provision of special services and the representation of interests vis-à-vis their environment. Given the well-organized state of labor associations, the relative weakness of small firms also furthers not only combination but also the tendency to exchange with labor in a cooperative way. That small firms prevail numerically as well as politically over large firms in Austria's conservative party and in the principal business association poses a problem to large firms as far as their interests conflict with those of small firms. For large capital it is thus important to find allies in order to realize its interests (Traxler, 1987:70). Among associations, the support by labor organizations (especially by the unions) are of utmost significance. Unions incline to support the interests of large capital in these cases since their internal decision-making is - in contrast to the principal business association (i.e. Federal Chamber of Business [BWK], see below) - biased in favor of large firms. While internal decision-making of the BWK rests on the principle "one man - one vote" which makes small firms relatively strong due to their large number, the unions' density is clearly higher in large than in small firms. Correspondingly, representatives from large firms dominate within the unions. One main controversy among small and large firms in which labor's support for large firms is essential concerns the question of how much domestic product markets should be opened up. In contrast to most large enterprises, the majority of small firms are definitely protectionist. Large, export-oriented firms find the support of labor organizations in this issue not only for the intra-organizational reasons mentioned above. Labor organizations advocate increasing internationalization of the Austrian economy since they regard this process as the central prerequisite for future prosperity. In claiming to represent also the interests of consumers in addition to those of the employees, labor organizations argue for internationalization as a means to exert downward pressures on consumer prices. As a consequence of the peculiar composition of Austria's domestic capital, economic modernization must often be realized against the opposed interests of influential small business. Macrocorporatism is the central institutional platform in order to overcome this opposition whereby the associations of labor are cast into a key role. Value system/political culture. Collective, solidaristic values which support the affiliation to political organizations have been deeply entrenched in the Austrians' orientation for a long time. This applies not only to interest

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associations but also to parties. Their density as well as their share of stable voters used to be relatively high. 4

The Formal Framework of Industrial Relations A high degree of "juridification" ( Verrechtlichung) is characteristic of Austrian industrial relations. But there is no unified statute covering all legal dimensions of the employment relationship. Instead, there are a variety of laws, each of which is designed to regulate special aspects of employment (e.g., vocational training) or the employment relationship of special groups of employees. These laws particularly distinguish between employment by State authorities ("public" employment relation) and by other employers ("private" employment relation). With regard to private employment relations, labor law most remarkably differentiates between blue and white collar workers. The following overview only deals with some basic rules on private employment relations. While individual employment relations are based on freedom of contract, legal norms (the so-called individual labor law) specify the conditions under which contracting can take place (Spielbüchler and Fioretta, 1984:2). Mutual rights and obligations that arise from the labor contract are defined for employers and employees. The primary aim of these labor laws is to protect the employees as the weaker party in the labor market. Accordingly, the laws address matters such as the regulatory power of labor contracts, the possible modes of payment, vacation entitlements and working time in general, conditions for dismissals, safety and health at work, protection of young people and of women (e.g., maternity leave). A special statute known as the Works Constitution Act (Arbeitsverfassungsgesetz) governs collective employment relations (Strasser, 1984). In addition to protection of the employees this "collective" part of the labor law is designed to enable well-ordered and peaceful employment relations. This law distinguishes between collective employment relations at the intra-firm level (i.e., plant, enterprise) and at the multi-firm level (associational, multi-firm bargaining). The rules on intra-firm relations (Betriebsverfassung) constitute the works council as the main representative of the employees' interests. The establishment of a works council is contingent upon two preconditions: First, a minimum number of employees per plant (i.e., 5 employees); second, an initiative of the plant's employees. Works councils are elected by the respective enterprise's employees according to proportional representation. If an enterprise consists of several plants, each plant's works council is entitled to elect certain of its members to a "central" (enterprise) works council. The mode and scope of representing interests by the works council vis-à-vis the management is precisely defined by statute. Most essentially with regard to the mode of interest

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representation works councils are obliged to act in a cooperative way, taking account of the employees' well-being and of the plant's prosperity. Depending on the particular issue, the works council's authority extends from information and consultation with management to co-determination including the opportunity of concluding a special type of formal plant agreement {Betriebsvereinbarung). Consultation means that the management must discuss a matter with the works council in advance of decision but is completely free in decision-making afterwards. Co-determination in the genuine sense enables works councils to veto a management decision. The legal effects of such a veto vary from issue to issue. The management's decision may be canceled or suspended pending a final decision by the labor court or a neutral arbitrator. Information and consultation rights apply to all matters in which the interests of the plant's employees are affected. The right of co-determination is limited to a narrow range of social and personnel matters such as, for instance, working time schedules and the introduction of performance-related payment schemes. The scope of possible subjects open to settlement by plant agreement is specified by the Works Constitution Act and collective agreement. The latter means that collective agreements can make use of an "opening clause" according to which issues that fall a priori under the competence of collective agreements can be delegated by the bargaining parties to regulation by plant agreement. Stipulations reached by plant agreement between management and works council are legally enforceable. This also holds true for collective agreements, which form the core of multi-firm labor relations. By analogy with individual contracting, multi-firm labor relations are based on the principle of free collective bargaining but are nevertheless governed by a legal framework (Berufsverfassung) which regulates the qualification of actors, the scope of their negotiations and the legal effects of their agreements. As regards to the qualification of actors it is a property of the Austrian labor law that it authorizes only multi-firm coalitions (associations) of employers and employees to conclude collective agreements. The main precondition of an association's right to conclude collective agreements is independence from its bargaining counterpart. This privileged position of multi-firm coalitions is of crucial importance in maintaining solidarity among their members. This is especially true of employers' associations which are - due to class-specific conditions of collective action - more vulnerable than unions to members' defections from associational goals (Traxler, 1989:35-41; 1991:155-157). Concerning the scope of collective bargaining, all aspects of the employment relationship as well as between the bargaining associations themselves can be settled by collective agreement. In this respect, the most important restriction is the principle of "negative freedom of association" according to which the associations are not allowed to conclude closed shop or union shop agreements. As already mentioned, collective agreements enjoy the status of law. These

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agreements bind and are enforceable against not only the members of the respective employers' association and union, but also against non-members as far as they are covered by these associations' membership domain. Bargaining parties are subject to peace obligation as long as a collective agreement of at least one year's duration is in force. In sum, labor law constitutes a rather complex system composed of different actors, regulatory levels and types of rules. Nevertheless,the system's components are well-tuned to one another. Above all, it establishes a clear division of labor among actors. This is of special importance with regard to collective employment relations, which in many countries are burdened with conflictprovoking rivalry; especially between labor representatives at different levels of interest representation. The labor law provides labor representatives at the multi-firm level with predominance over those at the levels below. This follows from the fact that only a narrow, precisely defined range of issues is within the scope of interest representation by works councils, while almost all industrial relations issues may be subject to (multi-employer) collective agreements. Most essentially, this predominance implies that unions, but not works councils, are explicitly empowered to conclude legally enforceable agreements on wage rates. 5 This hierarchy of regulatory levels is accompanied by a hierarchy of rules. The main criterion for setting priorities among the different types of rules (statutes, labor contracts, plant agreements and collective agreements) is to favor the employees' interests (Günstigkeitsprinzip). According to this, the rule that is most favorable to the employees supplants all the other rules relating to the same issue. In contrast to the comprehensive laws governing other aspects of industrial relations, a cohesive legal framework for regulating labor conflicts does not exist. Even the few norms that explicitly or implicitly deal with the problem of labor conflict are often controversial. For example, one problem involves the works council's role in labor conflicts. Given that the works councils are obliged not to undermine their plant's prosperity, some jurists argue that this role is not compatible with organizing strikes and that works councils are accordingly under absolute peace obligation (Strasser, 1984:155). The main reason for the lack of formal conflict regulation is that labor conflicts seldom arise in Austria. Correspondingly, this issue has attracted the attention of neither the legislature nor the courts. 6 While the conduct of labor conflicts is largely free from formal regulation, the Works Constitution Act nevertheless provides grievance procedures to settle disputes arising out of industrial relations. Generally these procedures may be initiated at the request of either bargaining party. The nature of the procedure (i.e., arbitration or mediation) varies with regard to the responsible State agency and to its role, depending upon the specific issue and the parties' preferences.

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The Actors Labor Against the background of the negative experiences with the unions' ideological fragmentation in the inter-war period, top union representatives reconstructed Austria's union system on the basis of the principle of industrial and unitary unionism in 1945. The consistency of this principle, as realized in the form of the Austrian Trade Union Confederation (Österreichischer Gewerkschaftsbund/ÖGB) is evidenced by the fact that the ÖGB is the most encompassing, centralized and unitarian union of 10 West-European countries (Visser, 1984). The ÖGB as the peak of Austria's unionism covers 14 member unions, each of which organizes a specific section of the whole economy in a mutually exclusive way: Four member unions each represent particular public sector employees (i.e., public administration of the federal State and of the member States; public administration of local authorities; railways; postal authorities). One union recruits employees of the culture industry. Another union organizes all remaining white collar workers union while the organization of blue collar workers in the private part of the economy is differentiated into 8 sectorally specialized unions. As a consequence of the partly separate organization of white and blue collar workers, the principle of industrial unionism (in the strict sense of "one plant-one union") is not fully established within the ÖGB. This principle was qualified for the sake of unitary unionism. That is to say, a separate union was conceded to white collar workers under the common umbrella of the ÖGB in order to prevent them from seceding as happened in Germany where white collar workers formed a union outside the DGB which relies strictly on industrial unionism. In regard to the relationship between the ÖGB and its member unions, all relevant resources (finance, office staff and interest-political tasks) are controlled by the ÖGB. In financial respects, members' dues are collected by the unions on behalf of the ÖGB which then gives back a minor percentage (15.32 percent in 1988) to the unions. A similarly high degree of centralization exists with regard to personnel matters, as the ÖGB holds the right to appoint staff members of its own as well as of its member unions. The Ö G B ' s predominance over member unions is most evidently expressed in the fact that member unions are not associations in their own right but dependent subunits of the ÖGB according to union constitution. This implies also a centralized distribution of interest-political tasks. Although they are internally allocated so that the ÖGB is responsible for representing interests common to all employees and member unions are responsible for interests affecting the employees of their special domain, only the ÖGB is entitled to conclude binding agreements with external

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interlocutors. This also applies to collective bargaining as all collective agreements must be signed on behalf of the ÖGB. Nevertheless, member unions are relatively autonomous in collective bargaining. With the exception of "general" collective agreements that cover all sections of the labor force and thus fall under the bargaining competence of the OGB, all other negotiations are carried out by the unions. Bargaining by member unions is by far more frequent than that by the ÖGB. In these cases, the ÖGB performs only a coordinating function. In advance of bargaining rounds this coordination takes place first via internal discussion between the unions' top representatives and the ÖGB officials, and between the ÖGB and the BWK via corporatist wage control in the Parity Commission (see below). In all the arenas of interest representation other than collective bargaining the ÖGB is the principal as well as the nearly exclusive voice of unionism. In addition to union constitution this ensues from Austria's macro-corporatist system of policymaking which generally strengthens those peak associations integrated into this system in relation to their affiliates. This high degree of centralization is accompanied by unitary unionism. As there is no union outside the umbrella of the ÖGB, it holds in fact a monopoly of representation. In addition to manifold organizational privileges guaranteed by external institutions (primarily by the State, see below) it is the ÖGB's well-designed form of internal goal formation that works against any tendency of secession. In this respect, the most significant point is that the ÖGB has internalized Austria's political/ideological "pillarization" originating from the 19th century and being mainly shaped by two influential camps (i.e., the social-democratic and the conservative-christian). There exist seven political factions within the ÖGB among which the social-democratic faction clearly prevails while the conservative-christian faction holds a notable but minor power position. This internal political differentiation performs two functions (Traxler, 1990b: 15). First, union members' attachment to one political camp can be instrumentalized for the purpose of getting support for the ÖGB. Second, it serves as the base of numerous interlockages with the government and parliament via the factions' affiliations with corresponding political parties. The basic mechanism for determining the strength of factions within the ÖGB is not intra-union election but the election for works councils. The factions nominate separate, competing lists of candidates for works council elections. The electoral outcomes of these ballots are the yardstick for allocating to each faction its number of seats in all union boards (i.e., the boards of the ÖGB and its affiliates). Since the works council is an institution that is formally independent of unions, this electoral procedure may seem astonishing. However, it is justified by union officials with the argument that this procedure ensures an especially high percentage of voting (about 90 percent) by international standards (Lachs, 1976:113).

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At any rate, the central precondition for this procedure is the nearly complete integration of works councils into the unions. More than 90 percent of works councillors are unionized. Regardless of the works council's formal independence from unions, they are in fact the backbone of union functionaries and consequently perform the tasks of union representatives at shop floor, namely recruitment of members and collection of union dues. With the exception of the printing and paper product union, no shop floor union representatives separate from works councils exist. Above all, this arrangement is attractive to unions because it ensures a legally protected union representative. One possible disadvantage may consist of the fact that the works councils' integration also implants their specific, legally framed orientations in the unions. Among these orientations, the works councils' obligation to cooperate with the management is of most importance. Given the clear preference of union top representatives for a cooperative interest representation, the works councils' orientation is well in line with union policy and thus reinforces this policy at the lower levels of intra-union hierarchy. The ÖGB's cooperative policy is also furthered by its internal political differentiation into factions. In order to maintain the unions' unity under this condition the predominant social-democratic faction seeks to arrive at a consensus among all factions in intra-union goal formation. Generally, this mode of decision-making moderates union demands, thus facilitating cooperation with employers. Overall, the ÖGB is based on an organizational arrangement whose elements are well synchronized with one another. This has certainly contributed also to the ÖGB's success in recruiting members. Since its formation the ÖGB belongs to the national union movements backed by the highest density from a comparative perspective. At present, about 60 percent of all employees are unionized. Unionization of industrial blue collar workers and of employees in the public sector is especially high. Unitary unionism does not mean that the ÖGB and its affiliates are the only labor representatives. In addition, there exists the Chamber of Labor. Based on the principle of legally compulsory membership the Chamber organizes all employees, with the exception of top managers, the majority of agricultural and forestry workers and civil servants. Although the Chamber's and ÖGB's membership domains largely overlap there is no competition but a fairly close cooperation between them. After World War I, the union movement initiated the formation of the Chamber of Labor as a counterpart of the chambers of business already established in 1848. Due to intense interlockages at all hierarchical levels, interest representation by the Chamber and the ÖGB relies on a clear division of labor. Collective bargaining is the exclusive domain of the ÖGB and its member unions while the Chamber works as a "brain trust" of the labor movement providing the ÖGB with expertise in all matters of economic and social policy. The employees' interests vis-à-vis the State are pursued together by the ÖGB and the Chamber. This also implies that both labor organizations

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are represented on macro-corporatist boards. This double representation of labor is to maintain power symmetry between Austria's two large political camps. Among the big four principal associations that are integrated into macro-corporatist policy-making, two (i.e., the labor organizations) are dominated by the social-democratic camp whereas the conservative camp prevails in the other two associations (of business and agriculture).

Employers Though collective bargaining is the exclusive task of multi-firm coalitions, the role of individual employers in industrial relations is by no means irrelevant. Employers are largely given free reign in the area of personnel management, as long as they do not offend the limited rights of works councils. Paradoxically at first glance, employers' autonomy ensues from the encompassing and centralized form of collective bargaining in general and of union structure in particular. "Qualitative" employees' interests relating to the specific problems of the workplace (e.g., the work organization) can hardly be unified and represented by comprehensive and centralized associations such as the Austrian unions. In addition, they are rather indifferent to these interests because changes in the qualitative composition of labor (e.g., in terms of qualification and occupation) do not endanger their existence due to their encompassing and centralized domain. Characteristically, the issue of job control as an issue of negotiations between employers and labor representatives is almost completely absent from negotiations in Austria. There has been only one collective agreement (in printing) concluded which regulates the introduction of new technologies. In regard to "quantitative" employees' interests (i.e., wage and working time) the unions orient their demands towards macroeconomic or sectoral productivity as an implication of their cooperative policy-line. This gives especially prospering firms considerable autonomy also in quantitative matters. Most obviously, this is expressed in that actual wages generally exceed standard wages (e.g., those of blue collar workers by 26.4 percent in the industry in 1988) (BWK, 1989). At the associational level the principal representative of business is the Federal Chamber of Business (BundeswirtschafiskammerlBWK). The B W K is the voice of business in macro-corporatist policy-making. Corresponding to the wide policy fields governed by macro-corporatism, the BWK is both an employers' organization and a trade association. As is the case with the ÖGB among unions, the B W K is extremely comprehensive in its domain and highly influential in the area of public policy compared to business associations in other countries (Coleman and Grant, 1988). On the basis of legally compulsory membership, nearly all sections of business (including also publicly owned enterprises) are covered by the BWK. It is the peak of a complex chamber

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system differentiated in territorial and sectoral/branch respects. The complexity is evident in the fact that more than 130 branch subunits exist at the federal State level and more than 1200 at the regional level (Traxler, 1986:189). The basic unit of this system is the territorial branch unit, which is the starting point of interest articulation. Members of these units each elect their representatives, which in turn form the next higher representational board. This form of representational membership continues up to the top level of the BWK. Candidates for elections are nominated by competing political factions so that a political differentiation is established within the BWK as in the case of the ÖGB. Also similar to the ÖGB, the BWK controls personnel management in its subunits while each subunit has its own financial resources. In regard to interest-political tasks, the BWK's subunits are autonomous in advancing their members' interests unless the interests of other subunits are affected. In this case, the matter must be devolved to that higher-ordered subunit whose domain covers all interests involved. For the reasons already mentioned with regard to the ÖGB, many important issues have to be dealt with by the BWK itself. As far as collective bargaining is concerned, subunits' negotiations are effectively coordinated by the BWK in order to maintain overall solidarity among employers. Furthermore, the BWK itself negotiates and signs "general" collective agreements with the ÖGB. Collective bargaining is also conducted by a few voluntary employers' associations on behalf of some special business groups (e.g., printing; cooperatives). Due to their narrow domain and small number of members it is the BWK that generally sets the pace in employers' collective bargaining policy.

The State As in most other Western countries, the State performs two central regulatory tasks in industrial relations. First, State legislation defines substantive norms governing working conditions of employees. It is worth mentioning that the State does not prescribe legally guaranteed minimum wages, except in the case of those employees who are not covered by any existing collective agreement. On behalf of this group, working conditions (including wages) can be fixed by the State. Second, State legislation has also enacted procedural rules which establish the legal framework for the exchange between capital and labor as already outlined above. Most notably, these rules demarcate a State-free sphere of exchange as far as collective bargaining is concerned. The right to autonomously conclude collective agreements is formally devolved to multi-firm coalitions of capital and labor, and the status of law is attributed to the collective agreements' provisions on working conditions.

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What makes the State's role in industrial relations as well as in all the other fields of economic and social policy special in Austria is the fact that the big four associations (i.e., the BWK, the ÖGB, the Chamber of Labor and the peak of the chambers of agriculture) continuously participate in both drafting and implementing legislation. Thus, the associations' role is not restricted to consultation. Especially when an issue is very important to them and when they are able to reach a consensus among one another, statutes are drafted by the associations themselves. This draft is then formally ratified by parliament and by the responsible minister. Hence, negotiations with the State are as important as collective bargaining for associational actors in industrial relations in order to advance their demands. The State integrates these associations into its policy-making process in order to legitimize its own economic and social policy decisions. Given the associations' impact on economic and social development, it is reasonable to let them participate in State policies because such participation increases the likelihood of support among the associations and their members for government policies. Because of the peculiar composition of capital in Austria, it is of special importance to the State to be backed by the big four with regard to economic restructuring. To sum up, corporatist policy-making rests on a symbiotic relationship among the actors involved. The State's economic and social policy becomes more efficient as participation increases the associations' willingness to exercise restraint in their demands in order to optimize economic development. Economic prosperity in turn facilitates interest representation by the associations by raising income levels. In addition, the associations are compensated for their "responsible" policy by attribution of State-licensed organizational privileges (e.g., representational monopoly; tax privileges; compulsory membership in the case of chambers) to them. As contribution to economic prosperity is a collective good (Olson, 1982), these privileges are necessary preconditions for maintaining the associations' internal stability and their willingness to cooperate. With regard to policy issues, this symbiotic relationship is reflected in a high degree of concertation and coordination of policy arenas. Thus, industrial relations, as the core arena of income policy, is fully integrated into overall economic and social policy-making without suspending the formal autonomy of collective bargaining from the State. Historically, it was exactly the need for concertation that brought about macro-corporatism. It arose as a means to control incomes in Austria's transition from a command economy during war to a market economy after 1945. Corporatist income policy was institutionalized in the "Parity Commission for Wage-and Price-Policies" in the 1950s (Marin, 1982). Although supply-side oriented policies have always been in existence, emphasis was placed on macro-economic demand management also in the following decades, culminating in the outstanding system of Austro-

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keynesianism in the 1970s. Since then the 1980s supply-side approaches have gained increasing importance to the policy-mix of corporatist concentration (Traxler, 1990b:21-23).

Nature of Labor Relations Process As already noted, collective bargaining is highly centralized and controlled by encompassing associations. Standard rates on working conditions are fixed on behalf of more than 90 percent of employees in the private sector and, pursuant to statute, on behalf of all employees in the public sector. While all of the collective agreements are settled by the ÖGB and it member unions in favor of labor, about 95 percent of all agreements are concluded on behalf of business under the umbrella of the BWK. Coordination of collective bargaining takes place not only within the domain of these two peak associations but also at the interassociational level established in the corporatist Parity Commission on which the big four associations are represented. Leaving aside the collective agreements conducted by the peak associations themselves, they additionally control collective bargaining by their affiliates via the Parity Commission. Sectoral/branch associations that settle collective agreements have to apply for approval by the Parity Commission in order to renegotiate collective agreements. The Parity Commission thus controls the timing of bargaining rounds. 7 In addition, the Parity Commission is formally empowered to reject compromises found by bargaining partners but does not actually make use of this. In regard to the coverage of collective agreements, most of them are concluded on behalf of special sectors/branches whose size and composition vary mainly according to associational domains. Collective agreements are fixed by the respective associations on behalf of single enterprises only in exceptional cases. Due to the separate unionization of white and blue collar workers in the private sector, collective agreements are also separately concluded on behalf of these groups. For the reasons already mentioned, the agreements' content is primarily related to quantitative issues, namely payment and working time. Customarily, negotiations between the bargaining associations take place in a peaceful way. The unions nevertheless regard strikes as a legitimate means to realize their demands but make use of it only rarely and as the last resort. What lies behind the peaceful way of collective bargaining is a consensus on the basic principles on which interest policy should rest. Both unions and employers' associations consider distributional conflicts self-defeating since they endanger the domestic economy's international competitiveness. Instead, they favor growth-enhancing policies as a precondition to income improvements. Consequently, they agree that wage increases should be oriented toward the growth of productivity. In

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fact, they were highly successful in following this policy-line from a long-term perspective. While the relationship between wages and productivity somewhat varies during short-term periods (e.g., increases in real wages lagged behind productivity by 0.75 percentage points in the 1980s), real wages and total productivity both increased by 3.5 percent on average during the last three decades (Guger, 1990:74). It should be noted that this cooperative policy rests not only on the individual preferences of the associations' top representatives but is also deeply implanted in the associations' organizational structure. Above all, the big four's domain is so encompassing that they cannot externalize a conflict-oriented policy's cost in terms of its negative impact on growth, price stability, etc. Hence, they follow a cooperative policy for the mere reason of minimizing internal conflicts (Traxler, 1987:65-66). Collective bargaining at the associational level is complemented by intra-firm agreements on working conditions. The associations' orientation toward average increases in macroeconomic or sectoral productivity gives prospering firms all possibilities of granting to their employees better working conditions than are fixed by associationally agreed standard rates. Depending on circumstances, these extra benefits are conceded either unilaterally by the management or are settled in negotiations if an effective works council exists. Especially in large enterprises a "second" bargaining round between the management and works council takes place, customarily resulting in a plant agreement. Though works councils are not authorized to negotiate about wage increases, they do so in the course of these bargaining rounds. Due to this lack of authorization only "informal" (i.e., legally not enforceable) plant agreements on this issue can be concluded by the management and works council (Traxler, 1982:252-253). The associations tolerate this practice since it enables a flexible adaption of actual wages to the business cycle and to the firm's individual performance.

Current Trends in Industrial Relations Industrial relations in Austria are confronted with economic, political and social changes similar to those going on in other countries. Most important developments are as follows: Deregulation. Most notably, in 1990 entry in the labor market has been made easier for foreign workers now pouring in from the formerly socialistic countries. Decentralization. Since the mid of the 1980s a number of sectoral collective agreements were concluded that combine flexibility and a reduction of (weekly) working time. Unprecedented competences regarding the concrete (redistribution of working time were delegated by the bargaining associations to management and works council.

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Privatization of public enterprises. In the course of restructuring the nationalized industry, a minor part of it was sold to private investors. The conservative party nowadays calls for selling the majority of publicly held stocks. Internationalization. The domestic economy's increasing penetration of the world market constrains the policy options of both the State and associations. This is manifested in a modification of the government's economic priorities. Since the mid-1980s cuts in public debts have gained in importance at the cost of sustaining full employment. In 1989, the government submitted an application to the European Community for membership in order to support the export industry in maintaining their competitiveness in the future single market. Erosion of collectivist values and of traditional political camps. This is closely connected with shifts in the occupational structure expressed in an increase of the share of the service sector and of white collar workers in overall employment. Above all, "individualization" poses a threat to the principle of compulsory membership in the chambers, and also makes recruitment of members more difficult for unions. All these tendencies constrain the governance capacity of macro-corporatism in general and the union's power position in particular. However, given the remarkable continuity of the Austrian industrial relations system, all these tendencies have so far exerted minor pressures on the system. There is no notable trend to anti-union labor management strategies among firms. By contrast to other countries (e.g., the U.K.) neither government nor multinational enterprises attempted to restructure industrial relations. Multinational enterprises generally integrate themselves well into the Austrian system since aside from the relatively high skill level of the labor force - social peace is one main reason for their investment in Austria (Glatz and Moser, 1989:44). A system's continuity is closely linked to its adaptive capacity, which is comparatively high in the case of Austria's industrial relations. This is most instructively exemplified in the case of working time, the regulation of which the associations managed to decentralize without losing their ability to set the framework for intra-firm working time policies (Maurer et al., 1990). As economic internationalization is accompanied by political integration in Europe, the future of the Austrian system is contingent not only on its own adaptability. Its long-term prospects will decisively be influenced by the form that economic and social policy will take in a more integrated Europe.

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Notes [1] On the conceptualization of corporatism in terms of structure see Schmitter (1974), in terms of functions see Lehmbruch (1977). [2] In 1978 about 29 percent of the employees in the industry worked in plants with a state's majority share of capital. In the case of financial institutions the corresponding percentage was 47 percent (Ederer et al., 1985:73). [3] In 1983 not more than 12 employees were employed on average by Austrian firms in the manufacturing sector (ÖSTZ, 1983). [4] 40.5 percent of all voters were members of a political party in the period of 1975-77 (Pelinka, 1980:200); from 1945 up to 1983 the share of stable voters of the two largest (i.e., the social democratic and the conservative) parties was between 80 and 89 percent (Birk & Traar, 1987:7). [5] Works councils would be allowed to bargain wage rates only if the respective employers' association and union agreed to delegate this issue to the regulation by formal plant agreement. Up to now no delegation of this kind has occurred since the associations are interested in maintaining their privileged role in collective wage determination. [6] While the basic structure of legal framework for industrial relations is very similar in Austria and West Germany, this point makes a difference as labor conflict is highly channeled by legislation and labor law jurisdiction in Germany. [7] This control is rather irrelevant at present but was important as a means to moderate inflation in times of relatively high price increases.

References Birk, F. and Κ. Traar (1987) "Der durchleuchtete Wähler - in den achtziger Jahren". Journal für Sozialforschung, 27, 4-74. BWK (1989) Jahrbuch der österreichischen Wirtschaft 1988. Wien: BWK. Cameron, D. (1984) "Social Democracy, Corporatism, Labour Quiescence, and the Representation of Economic Interest in Advanced Capitalist Society". In J. H. Goldthorpe (ed.), Order and Conflict in Contemporary Capitalism, 143-178. Oxford: Clarendon Press. Coleman, W. and WT Grant (1988) "The Organizational Cohesion and Political Access of Business: A Study of Comprehensive Associations". European Journal of Political Research, 16, 467-487. Ederer, B., W. Goldmann, C. Reiterlechner, R. N. Reitzner and H. Wehsely (1985) "Eigentumsverhältnisse der österreichischen Wirtschaft". Sonderheft Wirtschaft und Gesellschaft, 11, 7-196. Glatz, H. and Moser, H. (1989) "Ausländische Direktinvestitionen und Industriepolitik". Wirtschaft und Gesellschaft, 15, 33-61. Guger, A. (1990) "Einkomms- und Produktivitätsgefälle gegenüber Westeuropa verringert". Monatsberichte, 63, 74-78. Lachs, T. (1976) Wirtschaftspartnerschaft in Österreich. Wien: Verlag des OGB. Lehmbruch, G. (1977) "Liberal Corporatism and Party Government". Comparative Political Studies, 10,91-126.

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Marin, Β. (1982) Die Paritätische Kommission. Aufgeklärter Technokorporatismus in Österreich. Wien: Internationale Publikationen. Maurer, Α., U. Moser, B. Perchinig, R. Pirker and F. Traxler (1990) Arbeitszeit zwischen Verkürzung und Flexiblisierung. Wien: BMfAS. Olson, M. (1982) The Rise and Decline of Nations. Economic Growth, Stagflation, and Social Rigidities. New Haven - London: Yale University Press. ÖSTZ (1983) Statistik der gewerblichen Wirtschaft. Bd. 2. Wien: ÖSTZ. Pelinka, A. (1980) Gewerkschaften im Parteienstaat. Berlin: Duncker und Humblot. Schmidt, M. G. (1986) "Politische Bedingungen erfolgreicher Wirtschaftspolitik. Eine vergleichende Analyse westlicher Industrieländer (1960-1985)". Journal für Sozialforschung, 26, 251-273. Schmitter, P. C. (1974) "Still the Century of Corporatism?". In F. B. Pike and Th. Stritch (eds.), The New Corporatism 85-131. Notre Dame - London: University of Notre Dame Press. Schmitter, P. C. (1981) "Interest Intermediation and Regime Governability in Contemporary Western Europe and North America". In S. Berger (ed.), Organizing Interests in Western Europe 287-327. Cambridge: Cambridge University Press. Spielbiichler, K. and H. Fioretta (1984) Arbeitsrecht. Bd. 1. Wien: Manz. Strasser, R. (1984) Arbeitsrecht. Bd. 2. Wien: Manz. Traxler, F. (1982) Evolution gewerkschaftlicher Interessenvertretung. Entwicklungslogik und Organisationsdynamik gewerkschaftlichen Handelns am Beispiel Österreich. Frankfurt/M-Wien: Braumüller-Campus. Traxler, F. (1986) Interessenverbände der Unternehmer. Konstitutionsbedingungen und Steuerungskapazitäten, analysiert am Beispiel Österreichs. Frankfurt/M.-New York: Campus. Traxler, F. (1987) "Klassenstruktur, Korporatismus und Krise. Zur Machtverteilung in Österreichs 'Sozialpartnerschaft' im Umbruch des Weltmarktes". Politische Vierteljahresschrift, 28, 59-79. Traxler, F. (1988) "Von der Hegemonie in die Defensive. Österreichs Gewerkschaften im System der Sozialpartnerschaft". In W. Müller-Jentsch (ed.), Zukunft der Gewerkschaften. Ein internationaler Vergleich, 45-69. Frankfurt/M. - New York: Campus. Traxler, F. (1989) "Comparing Business Interest Associations and Labor Unions: Theoretical Perspectives and Empirical Findings on Social Class, Collective Action and the Organizability of Interests". Unpublished paper. Traxler, F. (1990a) "Interests, Politics, and European Integration: Austria's Political System in the Wake of 1992". European Journal for Political Research, 27, 169-183. Traxler, F. (1990b) "Still a Country of Corporatism: Industrial Relations in Austria". Unpublished paper. Traxler, F. (1991) "Gewerkschaften und Arbeitgeberverbände: Probleme der Verbandsbildung und Interessenvereinheitlichung". In W. Müller-Jentsch (ed.), Konfliktpartnerschaft, 139-165. München-Mering: Hampp. Visser, J. (1984) "The Position of General Confederations in the National Union Movement: A Ten-Country Comparison". European University Institute Working Paper No. 102.

Brazil Russell E. Smith

Introduction The Brazilian industrial relations system, like Brazil itself, is in transition. The basic thrust in the labor area is from a quasi-corporatist system of Statedependent labor unions toward a more liberal system with significantly increased autonomy for labor unions. This transition is symbolized by provisions in the new constitution which end the government's power to place unions under trusteeship and which greatly increase the potential for legal strikes, including for public employees. On the other hand, the new constitution increases the already substantial public regulation of individual labor relations. Similarly, the role of the labor courts, which can decide both individual and collective disputes, has grown through an increase in the number of issues to be decided by the courts in light of the reduced role for the Ministry of Labor (Cordova, 1990:17-18; Rodrigues, 1990:260-264). The decline of government involvement in collective labor relations is part of the broader process of political redemocratization taking place in Brazil after 21 years of military rule. Redemocratization itself is the result, not only of the withdrawal of the military, but also of years of struggle by many sectors of Brazilian society, including portions of the labor movement which played a leading, if not decisive, role. Representative of this progression is the rise to prominence of 1978 strike leader Luis Inácio Lula da Silva, the Workers' Party candidate for president in 1989 who came close to winning in the runoff election. While the process of redemocratization has been underway since the late 1970s, its key legal milestone is the new national constitution that went into effect on October 5, 1988. This constitution, written by a congress elected in November 1986 with constituent assembly powers, replaced the constitution imposed in 1967 by the first of the 1964-1985 military governments and amended in 1969. The 1988 constitution completed the process of formal redemocratization, except for the direct election of the president in November and December 1989, the first in 29 years, and the election of State officials and a new congress, again with constituent assembly powers, in October 1990. Given the role of the political environment for an industrial relations system, and the necessary association between democratic and labor rights, the establishment of

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constitutional democracy is a step forward in the direction of a properly functioning democratic industrial relations system. Two characteristics of Brazil's economic environment, chronic inflation and an extremely unequal distribution of income, place unique demands on the industrial relations system. Inflation routinely runs at two-digit monthly rates, though with wide fluctuations, and, in spite of a series of economic stabilization plans, has become the central driving force in the daily routines of Brazilian economic life. At the same time, the fundamental underlying questions of public expenditure and taxation go unresolved. Brazilians have been able to coexist with inflation because of the system of indexation, called monetary correction, established by the first military government (1964-1967), which reduced the discomfort and allocative distortions that result from inflation. Initially assets, especially government bonds, were indexed and later adjustment mechanisms were provided for rents and wages as well. Although monetary correction was intended as a temporary measure, it became permanent and pervasive in the economy. Inflation became self-perpetuating and has been termed "inertial inflation" as past inflation became the principal cause of present and future inflation (Baer, 1989:165, 274-315). The significance of inertial inflation for labor markets and labor relations is the constant erosion of real wages. As a result, the industrial relations system must provide some mechanism to adjust nominal wages in order to maintain real wages. The mechanism can be either individual or collective renegotiation, or publicly sponsored wage indexation. In either case, the process by which this adjustment is made has been a major source of controversy in Brazilian labor relations. In periods of collective bargaining, the collective wage adjustment has been a source of anxiety and industrial conflict. In periods with formal wage indexation, the calculation of the index and other technical aspects were sources of controversy under both military and civilian regimes. In any case, real wages in Brazil can fluctuate widely in response to inflation, especially when slack labor and product markets provide little incentive for the employer to maintain real wages. The other important characteristic of Brazil's economic environment for labor is its very serious set of social problems including highly visible abject poverty, dramatic regional inequality, and precarious social services. Symbolic of these problems is Brazil's highly unequal distribution of income. In 1983, the top ten percent of households received 46.2 percent of income and the top 20 percent of households received 62.6 percent of income, while the lowest income 60 percent of households received 18.8 percent of income, making Brazil's income distribution one of the most skewed in the world (World Bank, 1990:237). Ironically, income distribution worsened in the late 1960s and early 1970s during the high-growth "miracle" period and has persisted, if not worsened, since then even though Brazil has posted significant aggregate economic growth in recent decades, with an average annual rate of growth of gross domestic

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product of 8.8 percent between 1965 and 1980 and of 2.9 percent between 1980 and 1988. In 1988 Brazil was the world's ninth largest market economy (World Bank, 1990:181-182). The three environmental variables together, new democracy, chronic inflation, and serious economic and social inequalities, suggest that Brazil might enjoy an active labor movement and might be ripe for the kind of redistributive efforts that labor movements advocate. The paper that follows discusses the origins, evolution, and present circumstances of the Brazilian industrial relations system in the context of its political and economic environment. Section 1 presents the basic corporatist framework of labor organizations which originated in the period of the Estado Novo dictatorship in the early 1940s. Section 2 outlines the role of State regulation and intervention in the corporatist industrial relations system. Section 3 presents the modifications and changes in the administration of the system in the populist, military, and redemocratization periods. Section 4 considers the industrial relations system as it is today following the changes brought about by the new constitution. Section 5 discusses current issues and trends.

Section 1 : The Corporatist Framework of Labor Organizations The basic corporatist lines of the Brazilian industrial relations system were established between 1930 and 1945 under populist strongman president Getúlio Vargas. The basic document is the Consolidaçâo das Leis do Trabalho (CLT), or "Consolidation of Labor Laws", issued on May 1, 1943, which systematized the labor legislation that had taken final form during the Estado Novo authoritarian State between 1937 and 1945. The CLT system was modelled in part on that of Mussolini's Italy and had the purpose of reconciling industrial conflict for the good of the collective whole (Erickson, 1977:17-18). The CLT provided strong State controls on labor by first defining employer, worker, and professional groups, called categorías, or "categories", which were then represented by State-sponsored and State-dependent organizations called sindicatos that were charged with a variety of service and representational functions. Placed under the tutelage of the Ministry of Labor and of the labor courts, sindicatos were to collaborate with the State in the development of social solidarity (CLT, art. 514). The concept of categories and the central role of the labor courts continue today as basic building blocks of Brazilian industrial relations. Because of the complex role of the sindicatos relative to the State, and because sindicatos exist for employers and professionals as well as for workers, the term "sindicato" cannot properly be translated as "union", although many workers' sindicatos have acquired the rank-and-file membership characteristics of unions. Therefore, in the discussion that follows, the term sindicato will be used as it would be in Portuguese (Erickson, 1977:2).

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Under the CLT, workers were members of a categoria profissionai, or "professional category", while firms were members of a categoria econòmica, or "economic category" (CLT, art. 511). Economic categories were defined by product or activity, while professional categories could follow both craft and industrial lines, with industrial groupings being more prevalent. Even in workplaces where an industrial-concept professional category was the principal category, many jobs and workers might be in other categories following craft lines, resulting in a system where there was no necessary one-to-one correspondence between worker and employer categories. Under the CLT, the specific categories were defined by Labor Ministry decree and listed in the Quadro de Atividades e Profissöes, or "Table of Activities and Professions", provided for in Article 577 of the CLT. Typically the categories were roughly at the level of aggregation of a two-digit industrial classification system, or three-digit in the case of more traditional activities like food processing. Professional categories had a base territorial, or "territorial base", which could be no smaller than the municipio, or "municipality", which is the basic unit of local government, and as large as the country as a whole as in the case of national industries like the airlines, and included all workers across firms in the activity. New firms and workers were assigned to categories by the Comissäo de Enquadramento Sindical, or "Union Jurisdiction Commission", in the Labor Ministry. The CLT provided that each category within each territorial base be represented by a sindicato único, or "single sindicato" in a system called "unicidade", or the "single-sindicato" system, which made the sindicato an exclusive bargaining agent. The single-sindicato system applied to both workers' and employers' sindicatos. The authorization procedure to establish or abolish a workers' sindicato required a vote of one-third of the professional category. Because of the large number of workers in a category, already established sindicatos were, in fact, permanent. Therefore, dissatisfied or competing political groups within the category would concentrate on taking over the existing structure by winning elections rather than by organizing competing sindicatos. Workers could, but were not required to, affiliate with the sindicato that represented their category, thereby creating a two-class system of membership. The first class of members consisted of those who were members of the professional category by virtue of activity or employment. The second class consisted of those persons in the category who had opted to affiliate, or to become "sindicalized". Sindicalized workers paid monthly dues over and above the annual union tax, had increased access to services, could run for office, and could vote in elections. The proportion of sindicalized workers in the category was typically low, around 25 percent of the category on average. The CLT provided for parallel structures of higher-level organizations of both employer and worker sindicatos in the form of federations and confederations. There was also a system of sindicatos, federations, and a confederation for

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professionals. Federations were organizations of at least five sindicatos within one or more related professional categories, generally on a Statewide basis. Confederations were organizations of the State federations across seven broad groupings of categories defined by the CLT as industry; commerce; sea, air, and river transportation; land transportation; credit companies; communications and publicity; and establishments of education and culture. The overall system covered service as well as manufacturing industries, and white-collar as well as blue-collar occupations. The system was expanded to include agriculture in the early 1960s. Voting power within federations and confederations was equal for each member organization regardless of size, thereby giving disproportionate power to the representatives of smaller sindicatos and smaller State federations. Retirement, medical services, and social security were provided by specialized institutes that corresponded to the national confederations and which were funded by employer, worker, and government contributions. The sindicato structure was publicly financed in that the basic source of revenue was the contribuiçâo sindical, or "union contribution". Established in 1942 as the imposto sindical, or "union tax", it acquired its present name in the reforms of the mid-1960s, but continued to be popularly called the union tax. The union tax was paid by formula by workers, by employers as firms, and by professionals to support their respective organizations. For the employer, the tax was a percent of capital and was paid in January of each year. For the worker, the tax was one day's pay in the month of March and was collected as a payroll deduction by the employer and deposited in a bank account in the name of the sindicato. Of the revenue collected, 60 percent went to the sindicato, 15 percent went to the federation, 5 percent went to the confederation, and 20 percent went to the "Special Employment and Wage Account" at the Labor Ministry. A second source of funding was membership dues paid by persons in the category who had opted to affiliate with the sindicato. The overall result of the union tax was a system of sindicatos that were financially independent and free of the need to organize new members. In fact, built-in incentives may have discouraged the sindicatos from increasing the number of affiliated workers in order to not dilute political power and services within the sindicato. In exchange for legal status and guaranteed funding, the CLT gave the three sets of sindicatos rights and obligations. Rights (CLT, art. 513) included the right to represent the members of the category, to establish collective contracts, to elect representatives, to collaborate with government agencies, and to impose dues on the members of the category. Obligations (CLT, art. 514) included collaboration with the public authorities in the development of social solidarity, provision of legal services for members of the sindicato, conciliation of labor disputes, and provision of social services in the workplace. To these obligations was added a detailed list of specific functions on which union-tax funds could be spent, including a variety of social, medical, dental, and legal services (art. 592).

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A consequence of this system was that the workers properly saw, and still see, the sindicatos as providers of social services rather than as advocacy organizations.

Section 2: State Regulation and Intervention under the CLT A central feature of the CLT system was the system of labor courts created to settle both collective and individual disputes between workers and employers. There were three levels of labor courts: the Juntas de Conciliaçào e Julgamento, or "Conciliation Courts", the Tribunais Regionais do Trabalho (TRT), or "Regional Labor Courts", and the Tribunal Superior do Trabalho (TST), or "Superior Labor Court". Individual disputes based on labor law and contract terms were heard by the Conciliation Courts, with appeal to the Regional and Superior Labor Courts. When negotiations broke down, collective disputes to decide the terms of collective labor agreements were heard by the Regional Labor Court, with appeal to the Superior Labor Court. At each level, the cases were decided by a panel of judges consisting of permanent professional judges and temporary judges appointed for three-year terms representing workers and employers. Labor and employer judges in the Conciliation Courts were nominated by the worker and employer sindicatos in the region and appointed by the president of the TRT. In the higher-level courts these judges were nominated by federations or confederations and appointed by the Brazilian president. The duties of a judge were compatible with other union duties and represented a substantial income to the worker. The attractiveness of these positions was a major source of moderation and cooptation of labor leaders (Mericle, 1977:311-312). The Ministry of Labor played a direct role in the management of industrial relations in the CLT system. It controlled the Union Jurisdiction Commission, the collection and disbursement of the union tax, supervised elections and strike votes, declared strikes illegal, and had the power of intervention in the sindicatos, federations, and confederations. Its operating arms were the Delegadas Regionais do Trabalho (DRTs), or "Regional Labor Offices", which performed the enforcement and mediation functions of the ministry. The Regional Labor Offices provided inspectors to enforce workplace protective and wage and hour legislation and clauses of the legal collective labor agreements, filling a void left by the lack of union representation in workplace. The DRTs also insured that the sindicatos obeyed the law, monitored sindicato elections, ruled on eligibility of candidates in sindicato elections, audited sindicato financial records, mediated labor disputes through voluntary mediation sessions, and applied sanctions (Mericle, 1974:81-83).

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Linking the Ministry of Labor with the labor courts was the Ministerio Público do Trabalho, or "Public Labor Ministry", whose officers are Procuradores da Justiça do Trabalho, or "Public Labor Attorneys". Public labor attorneys had a dual function in that they were both judges on the panels of the two higher levels of labor courts and also active representatives of the Ministry of Labor with the obligation to give opinions, report back to the ministry, ensure that decisions are respected, appeal decisions to the next level, and to perform the active functions of an attorney. In authoritarian periods when the executive branch was attempting to control the actions of the autonomous labor courts, the public labor attorneys performed a central coordination function (Mencie, 1974:87-89). In the area of individual labor relations, the CLT provided detailed protective legislation covering secondary aspects of the employment relationship, but with regard to wages and hours the CLT "was not especially generous" (Cordova, 1990:255). Worker identification books, called carteiras do trabalho, were established (arts. 13-56) in which were to be recorded personal information, employment history, history of work-related injuries, salary history, including promotions, collective readjustments, interim wage increases in advance of the expected collective readjustment, etc. The CLT provided detailed regulation of time at work including the length of the work day (eight hours) and week (48 hours), rest periods, and night work (arts. 57-75). An annual vacation of one month was required (arts. 129-153). Regulation was provided for health and safety standards (arts. 154-201) and duration and conditions of work in 13 named industries or activities (arts. 224-351). There was additional protective legislation for women (arts. 372-401) and for young workers (minors) (arts. 402-441). With respect to wages, a system of regional minimum wages was established with the levels to be set by the executive branch based on the recommendation of tripartite regional minimum wage commissions and designed to meet the basic needs of the worker and his family (arts. 76-128). Other aspects of wage determination, such as level and differentials by skill and occupation, were left to the employer or to collective negotiation. Regulation of the individual labor contract itself (Title IV) covered remuneration (arts. 457-467), alteration (arts. 468-470), suspension and interruption (arts. 471-476), recision (arts. 477-486), advance notice (arts. 487-491), and "stability" or job security (arts. 492-500). The system of job security is of particular interest to collective labor relations. The job-security system established a monetary indemnity for workers proportional to the time served (from one to ten years) with an employer and theoretically granted a permanent job after ten years of service. As a result, the system provided some job security to labor activists who had acquired full job security after ten years of service. In the area of collective labor relations, the sindicatos were authorized to negotiate collective labor contracts. These were to set standards above the minima provided by the CLT. There are several types of collective labor

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agreements. When collective contracts were negotiated between sindicatos and cover all workers in the category, they were called convencoes, or "conventions". When an agreement was negotiated between the workers' sindicato and an individual firm, it was called an acordo, or "accord". Since accords set standards above those of the conventions, the result was a three-tiered set of rules, with an accord between a firm and a workers' sindicato setting standards above those set in the convention between the employers' sindicato of the same firm and the same workers' sindicato, which had set standards above those in the CLT. There were four levels at which a collective agreement could be reached. The first level was an agreement between the two sides themselves. The second level was an agreement between the two sides achieved with mediation by the Regional Labor Office. The third level was an agreement reached in a conciliation session at the Regional Labor Court and the fourth level was an "agreement" determined by decision of the Regional Labor Court. The process within the Regional Labor Court was called a dissidio coletivo, or "collective disagreement", with the decision itself called a sentença normativa, or "normative sentence", referring to its rulemaking character with respect to the whole category. In practice, the term dissidio coletivo can refer to the decision itself. Those negotiated agreements filed with the Regional Labor Office or the Regional Labor Court have the force of law. Because of the potential for confusion inherent in the use of the word "contract", the discussion that follows will use accord, convention, and collective decision rather than referring to a collective labor contract in its most generic sense. Strikes and lockouts without prior approval of the Regional Labor Court were forbidden under the CLT and penalties were imposed (CLT, arts. 722-725). Labor courts were to replace strikes as the means to resolve issues that could not be decided between the two parties. Decree-Law 9,070, issued in the transitional period before the establishment of the 1946 constitution, permitted strikes only after the remedies provided by the labor courts were exhausted. The 1946 constitution guaranteed the right to strike, but because the regulatory legislation was never provided, the earlier restrictive legislation remained in effect. However, in the relatively permissive 1950s and early 1960s, strikes were allowed and tended eventually to be decided by the labor courts because of the lack of organization and discipline among the workers and the ease with which conflict was passed on to these courts. Coincident with Vargas' establishment of the CLT was the establishment of a multi-party political system in preparation for the return to democracy at the end of World War II. The party established for workers was the Partido Brasileiro Trabalhista (PTB), or "Brazilian Labor Party". PTB activists, and later ministryappointed trustees, controlled the State-sponsored system of sindicatos just described. Supported by the union tax and dispensing social services, the system provided a power base in competition with leftist groups. Labor leaders tended

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to become program administrators for the social services provided by the sindicatos and patronage brokers vis-a-vis the State with industrial conflict being handled through the labor courts. Such labor leaders were termed pelegos, or "sheepskins", referring to saddle blankets that made it easier for the rider to ride a horse (Erickson, 1977:43). Traditional union activities, such as the organization of workers for class conflict and collective bargaining, were not encouraged under the CLT. The overall system evolved with weak links to the workplace and was more characterized by the provision of services and favors rather than by labor militancy.

Section 3: Modifications of the Corporatist Industrial Relations System The Brazilian industrial relations system of today is the result, not only of the corporatist system consolidated in 1943 with the CLT and of the 1988 constitution, but also of a series of changes in the actors, institutions, policy tools, and political regimes over three broad periods since the end of World War II. The first period is that of populist democracy (1945-1964). The second corresponds to the military regime until the beginning of the redemocratization process (1964-1978). The third period is the redemocratization after 1979, which includes the final military government (1979-1985), the two subsequent civilian governments (1985-1990 and post-1990), and the new constitution. The most important modifications in the industrial relations system were concentrated in two rather short moments of rapid institutional change that separate the three periods. The first moment was the three years that immediately followed the 1964 military takeover. The second moment can be identified by the successful 1978 strike movement and the 1979 wage policy law that provided both true indexation and opportunity for negotiation. The 1964 military takeover was in no small part a response to the perceived threat to national security of progressive forces in the labor movement. After a period of heavy use in the late 1940s of the government's power to intervene in the sindicatos, labor activists acquired more freedom in the 1950s and by the early 1960s were able to put pressure on the government, especially in the area of basic reforms. An annual system of negotiations developed for each category which took place at a particular date each year called a data-base, or "base-date". Both economic and political strikes took place in the major urban centers. The minimum wage was used actively by populist presidents to set wage levels for urban workers and other wage advances such as a Christmas bonus, known as the thirteenth-month salary, and a "family salary", an

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increment to a worker's wages based on the number of his underage children, were introduced. In response to the growing public disorder, the military government used direct repression and the authoritarian powers of the CLT system, especially the power of intervention, to bring the system of worker's sindicatos, federations, and confederations under control. A new strike law, Law No. 4330, was passed in June 1964 that was so procedurally restrictive that calling a legal strike was close to impossible (Mericle, 1974:127-132). The CLT's two wage-setting mechanisms, the regional minimum wages and the collective percentage wage adjustments in the collective labor agreements, were taken over by the central economic authorities and administered initially as part of the economic stabilization program and later as part of the general indexation system. A complicated formula based on both past and expected future inflation was created to justify, if not calculate, the new, adjusted, lower real values of the minimum wage and to dictate the value of the annual percentage collective wage adjustment. The annual data-base for each set of professional and economic categories became the date for the application of the wage policy. The CLT was modified so that any clause in an accord, convention, or collective decision which contradicted the government's macroeconomic and financial program would be nullified (CLT, art. 623). Although the forms of collective bargaining were maintained, the substance was lost (Smith, 1988:160-161). A 1966 change in the CLT's job-security provisions which has had continuing consequences for collective labor relations was the effective abolition of the old "stability" system and its "optional" replacement by a new job-loss indemnity system called the Fundo de Garantía por Tempo de Serviço, (FGTS), or "Time of Service Guarantee Fund". Persons who opted for the FGTS gave up the possibility of a life-time permanent job in exchange for a guaranteed lump-sum indemnity if they lost their employment "without just cause". The indemnity was paid from a blocked personal bank account into which employers had paid on a monthly, current-cost basis. Under most circumstances the worker could receive the indemnity with a minimum of procedural difficulty and could change jobs without losing the contributions of the previous employer due to account portability. The advantages for the employer were that there were few constraints on discharge and the direct cost of discharging a worker was only 10 percent of previous contributions, adjusted for inflation. Without the constraints of the old stability system, employers were free to engage in forced-turnover policies in order to lower wage costs and to avoid the full impact of the mandatory annual collective wage adjustment. For the sindicatos, the consequence was that the procedural guarantees of the old stability system, which had protected activists and shop stewards in the workplace, were lost (Mericle, 1977:321). Broad resistance to the military government led to increased repression and the government's assumption of dictatorial powers with Institutional Act No. 5

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in December 1968, which continued for a decade. During this period the government tightened its controls over labor organizations through direct repression and a combination of the use, and the threat of the use, of the corporatist controls on labor organizations. There were no full-fledged strikes, and almost no labor activity at all between 1968 and 1978. In response to these controls, labor activists began to develop alternative organizational forms outside of the official sindicato structure in the form of clandestine plant-level committees (Erickson, 1977:171-172). This committee system contributed to the job actions in modern industry during the 1973 boom and eventually grew into a grassroots unionism based on workplace organization. With time, these plant-level committees challenged the official sindicato structure in elections and became know as the "union opposition". When the union opposition won elections, they were called auténticos, or "authentic" leaders, as compared to the pelegos or administrative unionists that had been ousted. Eventually this process became known as the "New Unionism" and was identified with the plant-based labor movement originating in the automobile assembly plants in the industrial suburbs of Sâo Paulo and especially with the Metalworkers of Säo Bernardo do Campo which represented workers in the foreign-owned automobile assembly plants (Alves, 1989:49-51). The second moment of rapid institutional change began with the April 1978 strike by the metalworkers of Säo Bernardo as part of the annual negotiation over the collective wage adjustment (Humphrey, 1982:160-207). In addition to being the first major work stoppage in ten years, the strike was workplace-based, started as a plant occupation, and broke with the previous pattern by asking for direct negotiations with the employers. Furthermore, it touched off an explosion of strike activity with a spontaneous nationwide wave of workplace-based strikes outside of the formal sindicato structure. A larger strike wave the next year was characterized by decision-making by large assemblies of the professional categories as the official sindicato structure became reinvigorated. In 1980, the third strike of the Sao Bernardo metalworkers was put down with substantial repression after 40 days, but was successful in demonstrating the ability of workers to organize to resist the government and to force direct negotiations with their employers (Alves, 1989:53-56). The success of the metalworkers of Sâo Bernardo and the advent of the "New Unionism" created a fundamental conflict within the corporatist sindicato structure. Specifically, new grassroots unionism competed directly with the non-militant, service-providing, administrative unionism dependent on the official structures. Even when the old-style union officials were not pelegos per se, they engaged in a much more cautious style of advocacy without significant organized rank-and-file support. This competition resulted in the 1980s in the emergence of labor centrals or confederations outside of the formal structure of the CLT.

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Foremost among these was the Central Única dos Trabalhadores (CUT), founded in 1983, whose origins could be traced to the clandestine factory committees of the early 1970s, to the auténticos in the late 1970s, and to the New Unionism of the early 1980s. The CUT is a labor center made up of representatives of workers and groups in the official corporatist structure. It is grassroots and rank-and-file-based, class-conscious, and electorally linked to the Workers' Party (PT). The CUT program combines militant trade unionism and a willingness to strike with a far-reaching program of social reforms, including land reform under the control of the workers. Its trade-union program opposes the corporatist CLT system, including the union tax. It is organized internally in national departments across professional categories within an industry and proposes collective contracts across professional categories. Competing with the CUT have been other labor centers made up of more moderate, administrative, and pelego sindicato leaders, without the grassroots orientation and with a more cautious, though reformist, political posture, also dating from 1983. One of the visible successor organizations is the Confederaçâo Gérai dos Trabalhadores (CGT), or "General Confederation of Workers", which took its present form in 1989, and has been associated with North American "free" and non-political unionism. A recent addition, formed in 1990, is Força Sindical, or "Union Power", which was formed to aggressively compete with the CUT and the CGT (Confederation) for control of the various sindicatos and higher-level bodies and in the national arena with a nonpartisan reformist political program. The government response to the New Unionism and the 1978 and 1979 strike movements was the new central wage policy of the 1979-1985 military government (Pastore and Skidmore, 1985:94). The wage policy, established by Law No. 6708 of October 30, 1978, replaced the old, essentially discretionary, policy that had been in place since 1965. The new wage policy mechanism combined genuine wage indexation that gave full compensation for past inflation using a regularly published price index with progressive earnings redistribution and an element of negotiation of a real wage increase under the guise of a negotiated productivity increase. The progressive earnings redistribution was accomplished by a differentiated percentage wage adjustment, with lower-wage workers receiving a larger percentage adjustment than higher-wage workers. The wage adjustment was every six months rather than once a year. However, any gain in average real wages from the implementation of semiannual adjustments was lost with the increasing rates of inflation which rose from 40 to 100 percent per year. The more liberal wage policy, a more militant workplace-based labor movement, and a less repressive government policy resulted in an increase in labor negotiation at all levels and strikes became more common. With the basic wage indexation provided by law, the content of negotiation broadened to cover productivity increases and fringe benefits. With the increase in firm-level

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negotiations, there were many more accords relative to conventions and less recourse to the labor courts (Souza, 1985:65). The Ministry of Labor encouraged the development of collective bargaining away from the tutelage of the State by making various proposals to encourage direct negotiations and the use of non-judicial mediators and arbitrators and by limiting its use of powers to intervene in sindicatos and to declare strikes illegal (Pastore e Zylberstajn, 1988:117-151). As the labor movement became stronger and the need for the executive to negotiate with congress became more pressing, there was increasing interest in dealing with the wage policy problem through a social pact, although without success.

Section 4: The Industrial Relations System after the 1988 Constitution It would be inappropriate to see the labor provisions of the 1988 constitution as a complete break with the past. In fact, the new constitution retained many features of the existing CLT, giving constitutional status to provisions and benefits already established in ordinary legislation. On the other hand, new ground was broken in several areas and some key conquests of the labor movement, such as the right to strike, were confirmed. Some provisions were explicitly included in the text while others were established in principle and awaited implementation through legislation. For some of these, transitional measures were put in effect until such time as legislation was prepared. Other issues were not mentioned at all. Since the principles in the constitution may contradict current law and practice, there should be ample opportunity for test cases in the court system. In the area of individual labor relations, visible changes included the shortening of the work week from 48 to 44 hours, with the overtime premium raised from 25 percent to 50 percent of regular pay. Annual vacation pay carried a 33 percent premium above regular pay. Retirees were to receive the "thirteenth-month" salary, which was to be paid by the government. Maternity leave was increased to 120 days from 90 days and paternity leave was established and set at five days for the transition period. In a continuing attempt to deal with forced-turnover policies, protection was provided against arbitrary dismissal in the form of compensatory indemnity. For the transition period, the direct indemnization was raised from 10 percent to 40 percent of the inflationadjusted amount in the worker's FGTS account that is attributable to the worker's time with the employer. In the area of collective labor relations, the basic thrust was to make the system more liberal. The constitution guaranteed freedom of union and profes-

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sional association without governmental interference or intervention and explicitly stated that governmental permission, except for simple registration, was not needed to establish a sindicato, thereby eliminating the powers of the Ministry of Labor over the sindicatos. Job security for sindicato officers and candidates was given constitutional status. On the other hand, the constitution was conservative in that it continued the labor court system and even expanded access to it by requiring that there be at least one Regional Labor Court in each State. Furthermore, the single-union system was retained. More than one sindicato per category was prohibited and the minimum territorial base remained the municipality, although the exact territorial base could be determined by the members of the category. The CLT system of federations and confederations was continued, at least implicitly, in that the single-union system was mandated for those levels. The two-class system of membership was continued as there was explicit protection of the right to affiliate or not affiliate with a sindicato. The last pillar of the CLT system, the union tax, was not mentioned by name. However, the constitution authorized the general assembly of a professional category to establish a contribution, to be collected through payroll deduction, to finance the sindicato's confederal system. This contribution was explicitly independent of the "contribution foreseen in law", meaning the present union tax. Thus, the constitution provided a way for the existing federations and confederations to be funded if the voting members of the sindicatos so desired. The constitution opened a new growth area for unionism in Brazil by giving civil servants the right to form sindicatos and to strike. Military personnel, however, were prohibited from unionizing and from striking. As a result, a large number of new categories have been defined and sindicatos registered. There has been little change in the private sector since the territorial bases, categories, and sindicatos were already well-established. The new constitution guaranteed the right to strike and broke with the legislation of the military governments by providing that workers would decide when to strike and for what purpose. Since for many years the sindicatos had struck with little regard for the law, in a sense the constitution was ratifying an already-achieved victory of the labor movement. Abuses of the right to strike were to be subject to legal penalties. The new strike law, Law No. 7783, which went into effect on June 28, 1989, repealed the two strike laws of the military regime and established procedures for calling and conducting a legal strike, in which, contrary to previous legislation, the demands and the decision to strike were to be decided by a general assembly of the category called by the sindicato in accord with its own bylaws. Firms were prohibited from hiring substitute workers, except to prevent irreparable damage to equipment during a strike, or in case of an abusive strike, and from engaging in lock-outs. Workers were guaranteed their wages during a lock-out. Strikes in essential activities and services were permitted and provi-

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sions for minimum public services were made. Abusive strike was defined as one not conducted in accord with the strike law, or that continued after arriving at an accord or convention, or after a decision by the labor court. However, strikes during the life of the contract were permitted to enforce a contract clause, or to reopen contract negotiations when justified by a new fact or an unforeseen event that substantially altered the employment relationship. The role of the Regional Labor Court in settling strikes and strike issues was retained, which continued the previous system and was conservative relative to the generally more permissive language of the 1988 constitution (Rodrigues, 1990:18). The new strike law made legal what was already a normal sindicato and worker activity. Strikes at the level of the firm occur, but are not necessarily of long duration. They are often staged in response to uncompensated inflation resulting from frequent changes in economic conditions and government economic policy. There can be substantial variety in strike activity and varying degrees of spontaneity and discipline. Strikes can be walkouts, selectively affecting only certain departments, "popcorn" strikes, breaking out for a few minutes randomly, work to rules, sitdowns, and occupations. Either party, or the Public Ministry of Labor, can ask the Regional Labor Court to settle the dispute, although the tendency is for this not to happen quickly, and to declare the strike "abusive". At the level of the individual sindicato, provision of social services continues to be an important activity, with services increasingly being financed by monthly dues. Greater emphasis, however, is now being placed on collective bargaining. The new constitution requires that the sindicato be involved in the negotiations in the workplace. On the other hand, the legally mandated presence of workers' sindicatos in the workplace is limited. Basically, the union structure is on the outside of the workplace looking in, except in firms where a sindicato director is employed. While there is job security for the seven sindicato directors, alternates, and candidates, at the plant level only the worker members of the safety committees have job security. The payment of 40 percent of the FGTS account balance at the moment of discharge has not deterred an employer from discharging a worker. In cases where the workers are organized, and where they have insisted, there may be a plant committee, but basic protection has come from an organized rank and file and not from legal provisions. Workplace committee members and militant workers can be discharged when the level of mobilization is low. The new provision in the constitution for worker representatives in firms with more than two hundred workers has met with employer resistance. In spite of the continuation of most basic features of the State-dependent corporatist CLT system, the practice of industrial relations has become much more vigorous. Many more agreements are being negotiated at the level of the firm, resulting in accords with an increasing number of clauses, though still focused largely on wage adjustment and fringe benefit issues and not on wage

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structure, job classification, production, or technological issues. Workers and their sindicatos are becoming much more sophisticated, as are the firms, which are now creating an explicit industrial relations function, in addition to that of human resources (U.S. Department of Labor, 1990:10-11).

Section 5: Current Trends in Brazilian Industrial Relations The fundamental trend in Brazilian industrial relations will continue to be in the direction of less State regulation, greater autonomy for labor organizations relative to the State, greater presence of labor organizations in the workplace, and more direct negotiation at the level of the firm. While there is no way to predict how far the process will go, there are substantial pressures in this direction since it is part of the larger process of modernization, liberalization, and democratization that is going on in Brazil. In the labor area, an important source of dynamism is the militant labor movement represented by the CUT and increasingly by the other labor centers. These groups, for the most part operating parallel to the CLT system, are competing for worker support, control of individual sindicatos and higher level labor organizations, and recognition in the arena of national politics. However, the government has also been promoting the liberalization and decentralization of labor relations with proposals for non-judicial arbitration and workplace worker representation. Continuing efforts from a variety of sources to improve job-security provisions in the workplace and to increase sindicato presence at the level of the firm in terms of both representation and negotiation are likely. A continuing source of controversy will be the future of the CLT-mandated union tax on which so much of the formal sindicato structure is financially dependent. Major segments of the labor movement publicly favor its abolition as a vestige of the State-dependent corporatist system of labor relations. In September 1990, the president of Brazil attempted to abolish the union tax by provisional measure, which was not sustained by the congress. Furthermore, the continued existence of the union tax puts Brazil out of conformity with the international community where a tax-supported system of labor unions appears to contradict the idea of free unionism independent of the State. On the other hand, the abolition of the union tax might not make much difference at the level of the local sindicato since many have alternate sources of funding. Similarly, the constitution did provide for an alternative contribution to support the confederal system. A continuing area of concern will be that of wage determination and wage policy. While the lengthy discussion of the politics and structure of labor organizations might suggest that sindicatos have the power to influence outcomes in the area of most concern to workers, which is the determination of

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real wages, this is not the case. The employer and worker sides of the industrial system can set wages only within the confines of the institutional and policy arrangements provided to them by the government. Aside from questions of economic growth and the supply and demand for labor, in Brazil the government sets real wages by establishing nominal wages through wage policy in the context of a rate of inflation over which it has some control. In terms of the wage policy itself, since the mid-1960s, the outcome of the negotiations between the employers and the workers, with or without a labor court decision, must be consistent with the government wage policy in effect. The predominance of wage policy over negotiated agreements continues to be the institutional arrangement, although the wage policy itself has varied over time. For example, since the mid-1960s a variety of wage policies have been in effect, ranging from the original across-the-board percentage collective wage adjustment computed by formula to recent attempts at no policy. Termed "free negotiation", this is really a policy of zero percent adjustment in the context of the inflation existing at the time. Given the centrality of both inflation and wage policy, much of the labor movement's effort goes into trying to influence wage policy on one hand and to avoiding or working around it on the other. In both cases, the objective is to maintain real wages in the face of continual erosion. This institutional arrangement guarantees a political face to the labor movement, including calls for a general strike to protest government economic policy, and proposals for a social pact. This chapter has presented the key elements of Brazil's industrial relations system as they have evolved since their origins in the Estado Novo period. Overall, there has been substantial continuity in the corporatist forms and institutions themselves. At the same time, the way these forms and institutions have been administered has varied significantly with the government in power. Furthermore, the response of workers to the repression of the military period resulted in changes in the industrial relations system itself, some of which have been ratified in the 1988 constitution. Foremost among these are the end of the government's intervention power and the permissive posture toward strikes. The political evolution of Brazil and its interaction with the development of the labor movement and labor institutions from the days of the Estado Novo illustrate the inseparability of labor and politics in Brazil. The process of redemocratization has been working well. Both the idea and the practice of civilian constitutional rule are firmly established and the executive and the legislative branches are increasingly willing to work together. It is more difficult to be sanguine about the chronic inflation and its source in public finances. Brazil has learned to live with inflation and even to profit from it. After years of economic programs, the public deficit and inflation seem to get worse rather than better. Until some broad social agreement can be reached on the level of taxation, subsidies, and public expenditure in Brazil, the process of wage adjustment in both the public and private sectors and job security,

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especially in the public sector, will continue to be the source of policy debate and controversy. Social and distributional problems lurking in the background, including income distribution, regional inequalities, and poverty will create a sense of urgency for the labor movement both in the workplace and in its political program.

References Alves, M. H. M. (1989) "Trade Unions in Brazil: A Search for Autonomy and Organization". In E. Epstein (ed.), Labor Autonomy and the State in Latin America, 39-72. Boston: Unwin Hyman. Baer, W. (1989) The Brazilian Economy: Growth and Development. 3rd. ed.. New York: Praeger. Consolidaçâo das Leis do Trabalho (1989) org. de Juarez de Oliveira. 11. ed. atual. e aum.. Sâo Paulo: Saraiva. Cordova, E. (1990) "From Corporatism to Liberalisation: The New Direction of the Brazilian System of Industrial Relations". Labour and Society, Vol. 14, No. 3, July, 251-269. Erickson, K. P. (1977) The Brazilian Corporative State and Working-Class Politics. Berkeley: University of California Press. Humphrey, John (1982) Capitalist Control and Workers' Struggle in the Brazilian Auto Industry. Princeton: Princeton University Press. Mericle, K. S. "Conflict Resolution in the Brazilian Industrial Relations System". Ph. D. dissertation in industrial relations, Ann Arbor, MI: University of Wisconsin, Madison. Mericle, K. S. (1977) "Corporatist Control of the Working Class: Authoritarian Brazil Since 1964". In J. Malloy (ed.), Authoritarianism and Corporatism in Latin America, 303-338. Pittsburgh: University of Pittsburgh Press. Pastore, J. and T. E. Skidmore (1985) "Brazilian Industrial Relations: A New Era?". In H. Juris, M. Thompson and W. Davis (eds.), Industrial Relations in a Decade of Economic Change, 73-113. Industrial Relations Research Association. Pastore, J. and H. Zylberstajn (1988) A Administraçâo do Conflito Trabalhista no Brasil. 3rd ed.. Sâo Paulo: IPE/USP. Rodrigues, L. M. (1990) "O Sindicalismo nos Anos 80: um balanco". Sao Paulo em Perspectiva, Vol. 4, No. 1, January-March, 11-19. Skidmore, T. E. (1988) The Politics of Military Rule in Brazil, 1964-85. New York: Oxford University Press. Smith, R. E. (1988) "Wage Indexation, Turnover, and Nominal-Wage Changes in Brazilian Manufacturing, 1966-1976". Journal of Development Economics, Vol. 28, 159-173.

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Souza, A. G. de (1985) Os Efeitos da Nova Política Salarial na Negociaçâo Coletiva. Sao Paulo: Nobel; Brasilia: Ministério do Traballio. U.S. Department of Labor, Bureau of International Labor Affairs (1990) Foreign Labor Trends: Brazil 1989. FLT 90-31. World Bank (1990) World Development Report 1990. New York: Oxford University Press.

Canada Robert Rogow

The Environmental and Institutional Setting Canada, a country with one of the largest areas in the world, has a modest population mainly concentrated near its southern border with the United States of America. It is a country highly differentiated on many levels. Due to its size, large physical distances separate regions, where severe winters in much of the country impose seasonal variations on economic activities. Linguistically and culturally, a quarter of the Canadian population are French speakers, located mostly in the province of Quebec where they comprise over 80 percent of the population. Variations are political as well as resource and cultural. Political power is relatively decentralized, with much authority held by the ten provinces rather than by the national government which operates under a parliamentary system. For example, the federal government's jurisdiction covers only about a tenth of the labour force, with the provincial governments having authority over the balance. The country has a highly prosperous resource-exporting economy. About one fourth of goods and services produced are exported. The United States is its main trading partner. Major exports include natural resources such as wheat, oil, lumber, wood pulp, potash, and fish. Under the North American Auto Pact, motor vehicles are exported as well. Proximity to the much larger United States is an important environmental factor. There is a long history of extensive U.S. investment and of the presence of U.S.-headquartered unions ("international unions"). While sharing many cultural and political characteristics with its large neighbor to the south that distinguish them both from many other countries (for example, the relative weakness of class identification), Canada tends to possess these features less strongly than does the U.S. In many ways it is closer in social and political culture to Western Europe than is the U.S.

The Structure of Collective Bargaining One of the most important characteristics of a nation's industrial relations system is the degree of centralization of its collective bargaining structure. Bargaining structure (roughly, the question of who bargains with whom), once

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established, tends to be rather stable, and acts, like such factors as the economic and political environments, as an important influence on bargaining organizations, bargaining processes, and bargaining outcomes. Collective bargaining structure is, on balance, less centralized in Canada than in most countries. Nevertheless it displays elements of both centralization and decentralization. In 1983 there were 23,406 collective agreements in effect (all data from Swimmer, 1989, unless otherwise indicated). At the same time there were 3,391,245 union members, suggesting a mean number of union members per collective agreement of 145. Even if we add another ten or twelve percent to this average figure, to account for non-members of unions who are covered by collective agreements, these figures still suggest a highly decentralized bargaining structure. This suggestion is somewhat offset by other data. For example, a 1982 survey suggested that a relative handful of larger agreements included the large majority of employees covered by collective agreements. The 1,850 negotiating units with 200 or more employees in them included 2,430,256 employees, a number that is eighty percent of the 1982 total union membership in Canada. Thus a small number of large units coexist with a very large number of small units. The 1982 survey (which was limited to units of over 200 employees) showed that bargaining between single employer and single union (the least centralized of relationship formats) accounted for eighty-five percent of all bargaining units and for sixty-nine percent of all employees covered by collective bargaining. On the other hand, much of this single employer bargaining was in multi-establishment units (forty-nine percent of single employer units and seventy-five percent of employees covered). This suggests a moderate degree of centralization. Multi-employer bargaining, the most centralized of bargaining relationship formats, and the predominant relationship in most industrialized countries, is relatively uncommon in Canada, accounting in 1982 for only nine percent of all bargaining units and only twenty-five percent of employees covered (Rogow, 1989b: 159-160). Most bargaining is intra-provincial, probably because of differentiation among provinces in labour laws and in industry mix and resource endowment. Differences among provinces in prevailing wages and labour market conditions often mean that a settlement level viewed as attractive in one region of the country would be viewed as unacceptable in another. Relatively few industries have only a single union representing employees. Most have three or four unions representing different groups of employees within the industry (Kumar et al., 1987:412-414). Relations among such unions are sometimes competitive, sometimes cooperative, and often swing back and forth between the two. Some tendencies have been observable during the 1980s toward the weakening of multi- employer and multi-establishment bargaining structures. This may

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be partly a cyclical phenomenon; during less prosperous times employer fears of union "divide and conquer" tactics are weaker, and going it alone looks more attractive. It may also reflect a more permanent shift in employer strategy, under which getting along with one's union and one's competitors may be less important than being highly competitive. In general, Canadian bargaining structure can fairly be described as more decentralized than that of most countries. Among the probable consequences of this decentralization are, compared to other countries: 1. a weaker position of central, compared to local, labour organizations, and the consequent weakening of political action, the union function that central bodies do best; 2. a greater firm and establishment specificity of bargaining, with a consequently greater degree of constraint on employer freedom of action in the workplace; 3. a greater degree of employee and local union leadership involvement in bargaining, with a consequent shift of bargaining priorities closer to those of immediate concern to employees, rather than those of longer run or institutional or strategic concern to the labour movement as a whole; 4. a greater degree of differentiation among settlements, more closely reflecting employer differences in ability to pay and union differences in ability and willingness to conduct effective strikes and less closely reflecting broader social concerns such as equality of compensation. One of the respects in which Quebec labour relations is distinctive is in the high degree of centralization of bargaining structure that has been legislated in both the public sector and the construction industry. This emphasis on provincewide bargaining is in part a recognition of the capacity for conflict created by the existence of multiple unions with representation within these two areas; in fact, a substantial proportion of the province's strike activity is found here (Boivin, 1989:429, 430-431,435).

The Legal and Public Policy Environment Laws and other reflections of public policy are important influences on collective bargaining in most countries. They are even more important in Canada than in most comparable countries. "More important" here means that public policy and changes therein are a more powerful influence on the behaviour of unions, employers, and employees and on the processes and outcomes of collective bargaining, relative to the power of other environmental factors - for example, economic and social factors - than in other countries. It also means that Canadian public policy is more interventionist, more legalistic, more complex, and more procedurally constraining than elsewhere.

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This may be attributable to public policy makers' distrust (or at least ambivalence) regarding employers, unions, and strikes. Employers have been seen as strongly motivated to resist, and as possessing the power to effectively resist, unionization of their employees, in the absence of legal compulsion to deal with unions. Unions were seen as potentially neglectful of majority employee wishes and interests, absent legal regulation. Strikes and lockouts, although seen as a necessary threat to induce compromise in collective bargaining, were seen as too destabilizing economically in a specialized resource exporting society; therefore, substantial procedural intervention to minimize their frequency and adverse effects were seen as necessary. Legislation during and immediately after World War II copied the main features of 1935 United States legislation (the "Wagner Act"). In both countries a degree of government intervention in the union recognition process was enacted. This intervention reflected governmental belief that employer resistance to unionization was so fierce that only violent and socially disruptive conflict would achieve unionization in the absence of legislative intervention in the process. Public policy attempted to neutralize that resistance by banning the use of any forms of coercion, and some forms of non-coercive persuasion, by employers and their representatives. An extensive jurisprudence has developed over the limits on employer influence on the employee decision to unionize. The basic model borrowed from the United States toward the end of World War II contained the following major features: 1.

2.

3.

4.

A majority of employees in a workplace or other grouping found appropriate by a government body have the right to decide whether or not they wish to be represented by a union in their dealings with their employer. Some categories of employees (for example, managerial employees and some confidential employees) may be denied this right. The union so chosen must meet some legal tests of independence from employer control, of reasonably formal organization, and of reasonable responsiveness to employee wishes. Unions are reasonably free to compete with one another for the right to represent employees; public policy does not recognize unions' "jurisdictional" property rights to the unorganized employees in their usual industry or occupation. If the majority of employees so decides, a government body (usually called a Labour Relations Board) will certify the union as the exclusive bargaining agent of the employee grouping. It is legally obliged to represent all employees within the grouping (called a "bargaining unit") whether or not they are union members. A union may not strike, picket, or boycott in order to compel an employer to recognize and negotiate with it. The employer is legally obliged to bargain with, and only with, the certified union to determine terms and conditions of employment for the people within the bargaining unit. It may not bargain with other unions, even those

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with substantial minority support within the bargaining unit. It may not bargain with individual members of the bargaining unit instead of with the bargaining agent. Employer and union are obliged to bargain "in good faith", that is, with a sincere intention of arriving at a collective agreement. Collective agreements must be in writing and must run for a fixed term of at least one year. If a majority of the employees in the bargaining unit so decide they may replace the union acting as their bargaining agent with another union, or may withdraw from collective bargaining altogether. No work stoppages are permitted during the life of the collective agreement, and a peaceful means of resolving disputes about interpretation and application of the collective agreement must be included in the agreement.

Canadian public policy from its first importation of the U.S. model has added the distinctively Canadian emphasis on conflict avoidance and conflict delay. Over the years Canadian law has diverged more and more from the original U.S. model. Although the main features of the two countries' statutes and their administration remained very similar, Canadian public policy became even more interventionist than that of its southern neighbor. It also became more sympathetic to unions and unionization. Divergence and differentiation has not only been in relation to the original foreign model, but has also been internal. With the provincial governments having jurisdiction over the bulk of the labour force in collective bargaining and related industrial relations matters, a minimum of eleven different statutes will be in place at any one time. The actual number may be much larger, because of special laws governing some or all public sector employees or construction employees, specific laws dealing with wage control, back-to-work laws, etc. The general features of the statutes, especially as regards private sector relationships, remain similar, but many details vary. The provinces of Quebec and British Columbia have in recent decades been perhaps the most variant from the Canadian norm, but all statutes have their unique features. This multiplicity of laws and of bodies administering and enforcing them can make bargaining relationships difficult if they cross jurisdictional lines. Problems of defining the jurisdictional border between federal and provincial authority can be complex in some industries. Legislation permits the parties to negotiate "union security" provisions (making employment or continued employment conditional on union membership). The strongest variant, the closed shop (which makes membership a pre-condition to employment) is uncommon outside of construction, accounting for only two percent of all collective agreements covering 500 or more employees in March, 1986 (Kumar et al., 1987:482). A milder variant, the union shop (which sets no union membership restriction on hiring, but requires

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employees thereafter to become and remain members as a condition of continued employment) is much more common. Union shop and modified union shop provisions existed in forty-four percent of such collective agreements. A number of jurisdictions require employers to agree to a very mild form of union security provisions, the requirement that non-members within the bargaining unit pay an amount equal to normal union dues to the union acting as certified bargaining agent.

Nature of the Labour Relations Process How Collective Bargaining is Carried Out Collective agreements run for a fixed term, and are formally renegotiated upon expiry. The number of negotiations is high mainly because of the decentralized nature of bargaining structure, discussed above. Thousands of agreements must be renegotiated each year. The process of renegotiating agreements, especially larger ones, tends to be slow, often taking more than six months. An important part of this slowness arises from the likelihood of government intervention upon failure of the negotiators to agree, especially where essential services or the perceived public interest is involved. This expectation of intervention may slow down the rate at which concessions are made. In addition, the interventions themselves (which are sometimes multi-stage) take time. Because of the public policy preference for settlements voluntarily reached by the negotiating parties, intervention occurs only after governments become convinced that bilateral settlement is unlikely. Even then, the early (and the most common) interventions are more "accommodative" in character (that is, are more concerned with helping the parties reach whatever agreement they would voluntarily agree to). Later stages of intervention, if any, become progressively more "normative" (that is, are more concerned with the nature of the agreement reached, and are more likely to apply macroeconomic or other policy criteria and less concerned about the preferences of the parties).

The Pattern of Strike Activity Work stoppages occur mainly in connection with the periodic renegotiation of expiring collective agreements, although there are a modest number of stoppages arising over the negotiation of first collective agreements. In addition a modest number of strikes over union recognition and strikes by unionized employees during the life of collective agreements occur (despite the usually

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unlawful status of such strikes). Strikes are much more common than lockouts, mainly because employers often find cessation of activities to be expensive and risky. When lockouts are used, they tend to be defensive or retaliatory in character, for example responses to partial or rotating strikes or strikes against some but not all members of a multi-employer bargaining coalition. Time lost because of work stoppages averaged 0.17 percent of total working time in the two decades after World War II. That figure doubled in the subsequent 1966-1983 period. Some, but by no means all, of the rise reflected the rise in the proportion of employees in unions and covered by collective agreements (Riddell, 1986:31). A rapid rise in strike incidence began in the mid-1960s. Canada has one of the highest rates of work stoppages in the industrial world. Between 1960 and 1984 only Italy among eight major industrial countries compared had a higher time lost percentage. Strikes can be either brief protests and demonstrations of membership support or lengthy exercises in economic attrition in which the side that can hold out longer wins. Compared to most countries, Canadian strikes are overwhelmingly of the latter type, especially in the private sector, where most time lost occurs. This happens because of the comparatively small role that government legislation and administrative rulings play in determining the substantive terms and conditions of employment. (Note the difference between the large procedural and the small substantive role played by government in Canadian collective bargaining.) This leaves to collective bargaining, and the work stoppage if necessary, a larger array of issues to be settled. Thus it could be argued that the greater Canadian time lost percentage, is a functional byproduct of the larger industrial relations system rather than a defect in the functioning of that system. Also, the longer duration of Canadian strikes, a consequence of their "attrition" character, is often a more powerful influence on total "time lost" than is the number of strikes. Public sector 1 unions are less stoppage-prone than private sector unions. For example public sector unions accounted for 18 percent of all strikes in the thirteen year period beginning in 1972, although they accounted on average for perhaps a third of all union members during that period (Swimmer, 1989:406). One consequence of this lower strike proneness, because public sector contract negotiations accounted for a rising proportion of all Canadian negotiations in recent decades, should have been a decline in the overall strike rate. The fact that this has not occurred (except for the mid-1980s recession period) mainly reflects a rise in private sector strikes. Although the right to strike is more available to public sector employees than in most comparable countries (Riddell, 1986:17-18), it is much more limited than in the private sector. This limitation is one of the reasons for its lesser strike incidence. Perhaps a majority of unionized employees in the public sector have their strike rights significantly limited or modified. The regulatory situation is

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complex, varying with the kind of public employee and the jurisdiction. Also, changes in legislation affecting the public sector are frequent, perhaps reflecting the political sensitivity of public sector strikes, which often interrupt delivery of valued services. But in general, municipal employees (other than police and firefighting employees) are the largest public sector group with private sectorlike strike rights. Police, firefighters, hospital workers, teachers, and non-municipal government employees have, depending on jurisdiction, a wide variety of provisions governing conflict.

Collective Bargaining Outcomes The content of Canadian collective agreements and the size of bargaining outcomes are in the main determined by the relative power and skill of the bargaining parties, and by the level of prosperity of and the business needs of the employing organizations. The relative power referred to is mainly the power to impose costs on the other side in the event of a work stoppage, combined with the ability to withstand one's own costs during the stoppage. In the public sector and in some larger and more visible private sector bargaining, "relative power and skill" also includes power to influence public opinion and government opinion. Environmental factors such as the state of the economy (both at its societywide macro level and at the micro levels of the industry, company, and workplace) and the nature of public policy toward bargaining are among the major underlying influences on relative power. They therefore influence both the size of settlements and the character of settlements. The 1981-1982 recession, for example, led to shifts in union and employer priorities, in employee wage expectations, in bargaining structures, in the bargaining process itself (for example, which party seeks major changes in existing agreements), and, of course, shifts in the size of settlements. For example, union priorities shifted from maximizing wage gains to protecting job security. Employers demonstrated more interest in cost control and in regaining workplace flexibility. Although many of these employer initiatives enjoyed only limited success, settlements during and immediately following the recession were more likely than earlier ones to contain wage freezes, lump-sum payments in lieu of wage increases, reductions in entry wage rates, increased employer scheduling flexibility, and reductions in the number of job classifications. In some cases the quid pro quo for these union concessions was an improvement in job security guarantees (Kumar et al., 1987:3). Negotiated wage increases for several years fell to their lowest level in decades. A number of employer bargaining coalitions broke up, comparisons with leading settlements lost some of their force, and establishment-specific criteria had more influence on settlements.

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Despite vigorous public "no concessions" statements, unions in general were reasonably accommodative to the newer employer concerns, and employers appeared willing to settle for less than complete success in their demands. Perhaps because of this de facto cooperativeness on both sides, the number of work stoppages declined and the substantial shifts to non-union production that the United States had experienced were duplicated in Canada to only a mild degree (Alberta and British Columbia construction activity shifted markedly to the non-union sector). Abstracting from the specifics of the business cycle and other immediate influences, the union/non-union differential for Canada as a whole has been estimated at approximately 15-20 percent. That is, studies attempting to control for factors other than the presence of collective bargaining suggest that union wages on average are 15-20 percent higher than they otherwise would be. This percentage varies considerably across occupations, industries, and other employee classifications (Riddell, 1986). Wage structure also appears to be affected by collective bargaining. For example, wage variation among occupations is probably lower within establishments, companies, and even industries than it would be without union influences. Non-wage influence of collective bargaining is also substantial. Employee benefits appear to exceed those of non-union employees by more than wages do. The influence of seniority rules regarding layoffs and promotion, substantial procedural protection against unfair discipline and dismissal, and other conditions appear appreciably superior to those in comparable non-union employment. Despite the volatility discussed above, substantial continuity exists in collective agreement language over the years. In a typical negotiating round, only a small minority of collective agreement terms are changed. Often the only changes negotiated are in wage and/or benefit levels. Normally, the terms of the old collective agreement are observed by the parties even after it has expired, pending agreement on a new one.

Relationships During Life of the Agreement Collective agreements cover a large proportion of the terms and conditions of employment. In addition to wages and benefits, questions of employment, transfer, promotion, layoff, discipline and discharge, contracting out, job assignment, and preferential rights of more senior employees are commonly dealt with. Because Canadian statutes are less likely to specify many working conditions and compensation matters than are statutes in comparable countries, collective agreements tend to deal with these issues, often in some detail. All agreements must by law contain provisions for the creation of a grievance procedure to deal with union complaints (usually on behalf of bargaining unit

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employees) of employer failure to live up to the terms of the collective agreement. Because bargaining is relatively decentralized, agreements tend to be workplace-specific, and are more likely to limit management day-to-day decisions more than multi-employer or other centralized agreements would. Agreements are lengthy, complex, and legally enforceable. Enforcement is ultimately available to the union through grievance arbitrators, individuals jointly selected by the employer and union involved, whose decisions are legally binding. Most grievances are settled, more or less informally, at the lowest level of the grievance procedure. Others are resolved at higher levels, involving more senior representatives of both parties. The union, rather than the individual employee, "owns" the grievance, and can therefore decide whether to proceed with it to arbitration. In about half of Canadian jurisdictions this right is subject to a statutory "duty of fair representation" which requires unions to avoid gross negligence, discrimination, or bad faith in representing individual employees. Some critics have claimed that this statutory duty pressures unions to pursue non-meritorious grievances. Leading arbitration decisions are publicly available and have considerable influence. Despite the small proportion of grievances going to arbitration, the prevailing arbitral jurisprudence has considerable impact on how grievances are voluntarily resolved. Many management decisions are made only after the probability of an adverse arbitration award has been weighed. The area in which arbitral influence has been most extensive is that of discipline and discharge. Because collective agreements rarely specify penalties for specific misbehaviours, and usually provide only that "just and reasonable cause" for discipline exist, enormous discretion has been handed to the arbitral community. An elaborate jurisprudence has developed that gives considerable procedural protection to employees (Swan, 1982:275-278). Most discharges appear to be protested by unions. In the absence of management concession or compromise a very high proportion go to arbitration, where a large minority are overturned, usually with a lesser penalty than discharge substituted by the arbitrator. Reinstatement of employees whose discharge has been so modified is the norm. Research suggests that many such reinstatements work out well. In addition to their important formal role in the grievance procedure, workplace-level union officials perform important communication and contract monitoring functions, and are often involved in informal consultation with lower and middle ranking managers. Many potentially grievance-generating issues are resolved through such informal means. In most workplaces no formal equivalent of the common European works council exists, although this situation is slowly changing. The expiration of the collective agreement does not extinguish the collective bargaining relationship. Public policy prefers to see that relationship as a permanent one, and is hostile to employer maneuvers designed to end it. Sale or

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other disposition of the business often results in the imposition on the new employer of the bargaining obligations and bargaining relationships of the predecessor employer. Shifts of work from unionized to non-union companies controlled by the same employer are substantially constrained. Relocations of businesses motivated even partially by a desire to escape from collective bargaining relationships can be violations of the collective bargaining statutes.

Industrial Relations Actors The Role of the Government Canadian governments play multiple industrial relations roles. They are themselves employers and funding sources of other employers. They create and amend statutes providing bargaining rights and governing bargaining behaviours. They monitor and administer conformity to these statutes, or appoint the bodies who do so. They intervene in conflict situations where the public interest or political considerations appear to call for intervention. They create and administer non-collective bargaining statutes that impact on collective bargaining (equal opportunity laws, unemployment insurance, health and pension legislation, etc.). They pursue non-industrial relations policies that have industrial relations consequences (on balance of payments, inflation, budget balancing, income redistribution, etc.). Tensions and inconsistencies among these roles exist. Further, Canadian governments are themselves internally differentiated by size, funding resources, functions, political party in power, etc.

Conflict Management The major emphasis in Canadian conflict management policy has been on conflict-delaying mechanisms, with conflict-forbidding mechanisms used only in situations involving more substantial costs to the public, and only after delay, and associated efforts at conciliation, mediation, and fact-finding, have proved unsuccessful. The traditional policy was both universal (that is, applied in almost all cases of negotiations impasse) and two-stage (that is, an initial "conciliation officer" stage and a later "conciliation board" stage if agreement had not yet been reached). Use of the strike or lockout was forbidden until the process was exhausted. Critics of the policy charged it was rigid, time-consuming, and likely to heat up rather than cool down the stoppage-proneness of bargainers. In recent years this policy has been replaced, by either of two policies, in all jurisdictions. The first rejects the earlier policy's universality; the first stage

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being used frequently but not invariably, with the second stage limited to more serious "public interest" situations. The compulsory delay of conflict is retained. The second policy is similar regarding universality, but also eliminates the compulsory conflict delay. Where the strike is forbidden (as it is in a substantial number of public sector situations), some form of compulsory interest arbitration is used. There is also provision in some statutes for voluntary choice of arbitration by one or both parties. One form of conflict prevention policy has been back-to-work legislation (ending or preventing a particular stoppage, and specifying some adjudicative mechanism for determining the terms of a new collective agreement), which has risen in frequency. For example, only six federal or provincial back-to-work laws were passed in the fifteen years before 1965, compared to thirty-five in the fifteen years following 1965 (Riddell, 1986:20).

T h e R o l e o f Employers and E m p l o y e r Associations Employer associations' direct bargaining role is very limited in Canada. Such bargaining in 1982 represented only 9 percent of all bargaining units and only 25 percent of employees covered. Indirect influence of employer associations extends beyond this, however. Especially in Quebec and British Columbia, where province-wide associations representing most major employers are especially active, technical assistance, information exchange, education, and lobbying functions are performed. Nationwide bodies such as the Business Council on National Issues, the Conference Board, and many industry-specific associations perform differing mixes of educational, public relations, cooperative and political functions that have some industrial relations impact. In some industries employers have faced special problems. In the construction industry during the 1960s and 1970s its many small employers found their bargaining coalitions frequently shattered by effective "divide and conquer" tactics of the construction unions, with consequent rises in construction wages much above the industrial norm. The major response to this problem was the passage of "accreditation" legislation in many provinces. Under this legislation bargaining associations were given power to act as exclusive bargaining agent for member firms, and member firms were restricted from deserting the association under union bargaining pressure. Employer acceptance of collective bargaining is probably lower than in Western Europe, perhaps reflecting the more serious workplace impact of unionization in Canada. Acceptance appears to be higher than in the United States, where a roughly similar workplace impact exists. Opposition to unionization appears to be stronger among small employers than among larger.

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The Role of the Unions The Canadian Labour Congress (CLC) is the leading union federation. In 1986 (Minister of Supply and Services Canada, 1988) unions with 58 percent of Canada's union membership were affiliated to the CLC; another 12 percent were affiliated to other federations, with the balance of the membership in unions unaffiliated to any Canadian federation. A substantial majority of the 39 percent of union members in "international" unions were in unions affiliated with the CLC. The CLC plays only a minor bargaining role, but its political and representational roles are fairly important. The CLC acts as spokesman of "labour" to the federal government. It lobbies in support of social and protective legislation (for example, unemployment insurance, child care, welfare legislation). It issues protests against measures seen as harmful to labour (for example, free trade, deregulation, privatization). It occasionally organizes nationwide political protests such as the "Day of Protest" one day work stoppage against federal government wage control legislation in the mid-1970s. It attempts to mobilize support for the New Democratic Party among affiliates. The CLC attempts to minimize competition among affiliated unions (for example, efforts by one union to displace another as bargaining representative of a group of employees). It provides technical services that affiliates, especially smaller ones, cannot afford (for example, education, economic and other research useful in collective bargaining, and legal advice). It occasionally attempts to stimulate or coordinate efforts of affiliates to organize presently unorganized workers. In general it has only modest power over its affiliated unions, especially the larger ones, functioning more as their agent than as their master. The role of provincial federations is similar to that of the CLC. They play a somewhat greater, although still mainly indirect, role in collective bargaining. For example, they mobilize support from other unions to aid an affiliate in serious bargaining difficulties or an affiliate fighting on an issue of broad importance. A major role is their attempt to influence provincial governments' enactment and administration of laws important to affiliated unions and their members (for example, collective bargaining laws and social legislation). They sometimes call for, coordinate, and to a modest degree enforce a united response to harmful government legislative initiatives. The micro-level activity of the unions is of considerably greater importance than is their macro-level activity, whether importance is measured by membership priorities or by resource expenditure or by impact on employing organizations. Although local unions carry out political, social, and welfare functions, their main activity is collective bargaining. The basic building block of the union is the local, which is based primarily on the individual place of employment rather than on some geographic basis of residence or employment.

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The local union (or some intermediate clustering of local unions) often enjoys relative independence from the top national or international leadership and, especially in the case of larger locals, often possesses substantial financial and manpower resources of its own. Union leaders normally come from the ranks of the employees their union represents, and work their way up the union's leadership hierarchy. Inter-union mobility of leaders is limited. A small proportion of union leaders leave to go to work for employers as personnel officers or to work for government as mediation officers. About half of local officers receive no pay, and put in only a few hours a week on union duties. Shop stewards, who normally represent the contract administration interests of a subset of the local's membership at the workplace, are usually elected and unpaid. Where locals are bigger and/or collective bargaining responsibilities are heavier, full time paid elective officials exist. Leaders at the national level are usually quite secure against effective electoral challenge. Although turnover among them is high, it is usually for reasons of age, health, and other factors not directly related to defeat in union elections. Election contests and turnover in office are appreciably higher among local leaders. (Chaison and Rose, 1982:147).

The Numbers and Types of Unions The years since World War II have seen very rapid change in Canadian industrial relations. Union membership grew substantially (from 16 percent of employees in 1940 to 39 percent of employees in 1985). Union density is below that of most comparable countries. In 1984 it was below Sweden, Australia, Great Britain, and West Germany. It was above only the United States and Japan, of the seven countries compared. (Wood and Kumar, 1985:364). The 1987 union membership was 3.78 million, equalling 38 percent of the non-agricultural paid workforce. Perhaps 42 percent of the work force were covered by collective agreements. (Kumar et al., 1987:385). There were 746 unions with 16,574 locals, with the large majority of members (about 97 percent) to be found in the approximately 190 national and sixty-eight international unions. Like many other countries Canada has experienced a shift from goods production to services production and from private sector to public sector employment. This, plus the higher union density in the latter sector, are reflected in the figures for 1986 (Minister of Supply and Services Canada, 1988:36), which show a combined total of less than 30 percent of union membership in mining, manufacturing, and construction - areas of traditional unionization. Public administration, services, and utilities (the latter two including many quasi-public areas such as crown corporations, health and education) show a combined total of over 62 percent. Between 1975 and 1985, union membership

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in goods-producing industries declined from 45 percent of total Canadian union membership to 31 percent (Worklife Report, 1988:6). Union density is low in private sector white collar employment. Unions are predominantly multi-occupational ("industrial") in organization. The traditional occupationally defined ("craft") unions usually today include large multi-craft and "industrial" components, because of mergers, unionizing efforts outside of traditional craft occupation, and the impact on occupations of technological change. Some of the newer public unionism is occupationally structured (nurses, teachers, police officers, firefighters, for example). Jurisdictional boundaries among unions are often imprecise and ineffective. Considerable overlap of membership within industries or within occupations can be found. Despite anti-poaching efforts by union federations, much organizing tends to be opportunistic. Considering the substantial regional and provincial variation in resource endowment and locational advantages and the consequent variations in the mix of production and employment, there is surprisingly little variation by province in union density. The high density in public employment is one stabilizing factor. This regional stability in union density is one explanation for the weak Canadian force of the "runaway shop" trend, the flight from areas of high union strength to escape collective bargaining. Another explanation may be the locational immobility of many resource and resource processing industries. A third explanation may be the lesser locational economic attractiveness of such low-density areas as exist. A fourth explanation may be the hostility of Canadian public policy to such tactics. The labour movement of Quebec reflects that province's distinctive features in a number of ways. A substantially higher proportion of union members than in other provinces are in unions affiliated to confederations other than the Canadian Labour Congress. The Quebec Federation of Labour, the CLC's provincial affiliate, enjoys considerably greater autonomy and resources than do other CLC provincial affiliates. The major rival confederation in Quebec, the CSN (Confederation des syndicats nationaux, or Confederation of National Trade Unions), is a secular and social democratic, predominantly white collar and public sector union that evolved out of the confessional labour movement supported by the Catholic church during the 1950s. Political activity by unions and political rhetoric by union leaders, sometimes of a radical character, are more common than in other provinces. The labour movement has been active in campaigns to increase the linguistic, cultural, and political autonomy of the province. Relations among confederations alternate between conflict and cooperation (Boivin, 1989:411-422). United States-based craft unions have had a Canadian presence since the last century, and during the World War II and immediate postwar years U.S. industrial unions became important in manufacturing and other largely blue collar

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industries. The relative size of "international" unions has been declining in recent years. They accounted for over 70 percent of union members in Canada in 1966, but for less than 35 percent in 1986 (Minister of Supply and Services Canada, 1986). The decline reflects the rise of public sector membership, which is almost exclusively "national" union, and some recent private sector breakaways, usually reasonably friendly (for example, in auto, paper, and lumber). Where affiliation with the U.S. unions is continued, an increase in the autonomy of Canadian sections has usually been obtained. Many "national" unions, despite the name, are not nationwide in membership, but are located within a single province, and sometimes deal with a single employer, and even with a single employer at a single location. Despite private sector breakaways, most national union membership is still in the public sector. Compared to private sector unions, public unions are late-comers on the union scene. Their growth was relatively sudden and spectacular. Their major growth spurt was during the 1960s and 1970s; membership rose from 1961's 183,000 to 198 Γ s 1,347,000. Much of this growth was the result of legislative changes and other public policy changes authorizing collective bargaining and changing the status of former employee associations to that of trade unions, the comparative absence of public employer opposition to unionization, and growth of public employment. Largely because of such employment and unionization trends, women have been increasingly represented among union membership. By 1986 they represented 36 percent of union members in Canada, more than double the proportion twenty years before (Kumar et al., 1987:29).

Future Trends in Industrial Relations Assessing the present and past in industrial relations is difficult enough; predicting the future is an exercise in creative writing. Nevertheless, two trends appear to be developing. The first is a decline in future union density and union bargaining power. The second is a modification of the roles played by Canada's collective bargaining system.

Declines in Union Density and Bargaining Power These may arise because of an unfavorable shift of various environmental factors. Changes in the public policy environment appear especially important, as was the detachment of the Canadian industrial relations system from the American one. This detaching showed itself in divergences in union density, the higher Canadian strike level, higher Canadian union opposition to concessions

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and cooperative programmes, and perhaps a less aggressive and extensive Canadian management strategy either to shift toward non-union status or to achieve more of the benefits of non-union status within existing collective bargaining (Anderson, Gunderson, and Ponak, 1989a:481). To a considerable extent, the superior fortunes of the Canadian labour movement, compared to that of the United States, have been explainable by a more supportive public policy and public opinion than in the U.S. If these two supports are shifting in the U.S. direction Canadian unions may face declines in numbers and influence. There is some evidence of shifting public opinion (and elite opinion) away from pro-union, pro-collective bargaining positions (Riddell, 1986:13). A declining public willingness to bear the real or perceived costs of stoppages especially in public sector's "essential services" - is observable in public opinion polls. Changes in public sector legislation have been in a generally anti-union direction. Enactment of the Charter of Rights and Freedoms in 1982 has created the potential for major changes in Canadian labour relations. The Charter constitutionally protects a wide array of individual rights against government actions. Such actions are permitted, however, where the courts find them to be within "such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society". This, and many other aspects of this constitutionally complex document, transfer from the political sphere to the judicial sphere many responsibilities for interpreting social and economic policy. Relatively few major collective bargaining issues have yet been addressed by the Supreme Court of Canada, and predictions at this point are difficult to make. The potential for change in the industrial relations system, however, is large (Carter, 1988:305-319). For example, the right of collective agreements to make union membership a condition of employment, the right of employers to discharge before a full hearing on whether just cause for discharge exists, and the use of union dues for political purposes are among the issues that could be affected. Much will depend on whether the courts see the collective agreement primarily as a purely private arrangement or as a statutorily influenced extension of government policies. Given the Charter's individualist orientation, however, it seems reasonable to predict that future decisions will do more to weaken than to strengthen collectivities such as unions. The market environments also may be moving in an unfavorable direction. Shrinkage of labour requirements in many traditionally highly organized industries and occupations through technological change, plus the exhaustion of organizable targets in the public sector, makes new organizing in the private sector's service industries and white collar and service occupations a necessity if union density is to be maintained. The potential for substantial union breakthroughs in organizing the unorganized seems limited, however.

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The relative increase in white collar, part time, "contract work", temporary personnel agencies and other more peripherally attached relationships means that a rising proportion of the work force will be in traditionally more difficult to unionize situations. Unions have made frequent attempts to unionize private sector white collar employees, with limited success. Considerable effort went into largely unsuccessful efforts to unionize the banking industry and the department store industry in recent years. Employee groups lacking the traditional union membership characteristics (occupation, tenure, gender, etc.) may not be unionizable by existing unions, or at least not by present policies and techniques. Increasing competitive pressures from emerging third world countries may limit union bargaining power. The recently concluded free trade agreement with the United States may add to this pressure, given the much lower union density in the latter. Even unionized U.S. producers may, because of economies of larger scale production, be able to increase competitive pressures on their Canadian rivals. On the other hand, some unionized Canadian companies will no doubt be able to expand successfully into U.S. markets, with associated expansion of employment and labour benefits. Given the likelihood of the above environmental changes, some shrinkage in the relative size of unions and their relative power seems likely.

Modification of the Bargaining System Collective bargaining in Canada may face two modifications. First, it may lose some of its centrality as the major and preferred mechanism for determining terms and conditions of work. Second, it may reflect a growing and relatively permanent managerial initiative. In Canada, as in other countries, recent years have witnessed a philosophical and political shift toward more reliance on market forces and less reliance on interventions designed to improve or offset market action. Collective bargaining, as an approved interference in free markets, may become a less preferred, less protected, mechanism. A related rise of concern for individual as distinguished from collective rights reinforces this tendency. Also reinforcing it is the rising priority of industrial relations issues (for example, employee health, employment equity, plant closures) that are better handled by legislation than by bargaining, especially decentralized bargaining. At the same time that the political arena is becoming more important to it relative to the collective bargaining arena, the labour movement faces the rise of legislative rivals to its claims on the public conscience and the public purse. Examples are women's groups, environmental groups, consumer groups. It is possible that labour's political clout may decline because of this rivalry. At the minimum, labour may have to learn to accommodate to many of the priorities of

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such alternate groups, may have to concentrate only on those issues on which common ground can be found with others. Only a spectacularly successful coalition would enable labour to recoup substantially on the statutory front that which it may have lost on the collective bargaining front. The spectacular rise in the relative membership and influence of public sector unions may move collective bargaining closer to the political arena. Bargaining outcomes may depend less on economic costs of agreement and disagreement of the bargaining parties and more on their relative success in gaining public support for their policies. The traditional reactive role of Canadian management at the bargaining table appears to be changing (Anderson et al., 1989a:470, 470, 483). Senior executives are seeing their human resource management policies (of which collective bargaining is an important subset) as more central to company success. New interest in modifying workplace labour relations (currently, in a Japanese direction), in achieving new flexibility in labour allocation decisions, and in building employee commitment have survived temporary recession circumstances. In addition, the United States example of successful withdrawals from collective bargaining may encourage imitation. In general, then, the institution of collective bargaining and the relative power of unions within it may face serious challenges in the coming years.

Notes [1]

Where used in this chapter, "public sector" includes more than employees of federal, provincial, and municipal governments; it also includes such quasi-public employees as those in education and health care, and employees of governmentally owned corporations.

References Anderson, J. C., M. Gunderson and A. Ponak (1989a) "Back to the Future". In J. C. Anderson, M. Gunderson and A. Ponak (eds.), Union-Management Relations in Canada, 465-485. Second Edition. Don Mills, Ontario: Addison Wesley. Anderson, J. C., M. Gunderson and A. Ponak (1989b) "Strikes and Dispute Resolution". In J. C. Anderson, M. Gunderson and A. Ponak (eds.), Union-Management Relations in Canada, 287- 316. Second Edition. Don Mills, Ontario: Addison Wesley. Boivin, J. (1989) "Union-Management Relations in Quebec". In J. C. Anderson, M. Gunderson and A. Ponak (eds), Union-Management Relations in Canada, 407-436. Second Edition. Don Mills, Ontario: Addison Wesley. Carter, D. D. (1988) "Canadian Labour Relations Under the Charter: Exploring the Implications". Relations Industrielles, 43, 305-321.

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Chaison, G. N. and J. B. Rose (1982) "Unions: Growth, Structure, and Internal Dynamics". In J. C. Anderson and M. Gunderson (eds.), Union-Management Relations in Canada, 125-154. Don Mills, Ontario: Addison Wesley Publishers. Kumar, P., with M. L. Coates and D. Arrowsmith (eds.) (1987) The Current Industrial Relations Scene in Canada, 1987. Kingston, Ontario: Industrial Relations Centre, Queen's University. Labour Canada (1985) Directory of Labour Organizations in Canada, 1985. Catalogue L2-2/1985. Minister of Supply and Services Canada (1988) Annual Report Under the Corporations and Labour Unions Returns Act, Part II - Labour Unions, 1986. (CALURA Report.) Ottawa: Statistics Canada, Catalogue, 71-202. Ponak, A. and L. Falkenberg (1989) "Resolution of Interest Disputes". In Amarjit S. Sethi (ed.), Collective Bargaining in Canada, 260-290. Scarborough, Ontario: Nelson Canada. Riddell, W. C. (1986) "Canadian Labour Relations: An Overview". In W. C. Riddell (ed.), Canadian Labour Relations, 1-93. (Research Volume 16, Royal Commission on the Economic Union and Development Prospects for Canada.) Toronto, Ontario: University of Toronto Press. Rogow, R. (1989) "Collective Bargaining Law". In A. S. Sethi (ed.), Collective Bargaining in Canada, 44-90. Scarborough, Ontario: Nelson Canada. Rogow, R. (1989) "The Structure of Collective Bargaining". In A. S. Sethi (ed.), Collective Bargaining in Canada, 132-168. Scarborough, Ontario: Nelson Canada. Swan, K. (1982) "Union Impact on Management of the Organizations: A Legal Perspective". In J. C. Anderson and M. Gunderson (eds.), Union-Management Relations in Canada, 269-286. Don Mills, Ontario: Addison Wesley Publishers. Swimmer, G. (1989) "Critical Issues in Public Sector Industrial Relations". In A. S. Sethi (ed.), Collective Bargaining in Canada, 400-421. Scarborough, Ontario: Nelson Canada. The Worklife Report, Volume 5, No. 6 (1988) "The Changing Industrial Pattern of Union Membership". Kingston, Ontario: IR Research Publications. Thompson, M. (1987) "Canada". In G. J. Bamber and R. D. Lansbury (eds.), International and Comparative Industrial Relations, 80-96. London: Allen and Unwin. Wood, W. D. and P. Kumar (eds.) (1985) The Current Industrial Relations Scene in Canada, 1985. Kingston, Ontario: Industrial Relations Centre, Queen's University.

The People's Republic of China Joan H. Coll

Historical Overview Relevant Laws The labor system in China is built on the premise that each person is entitled to a job. Official Chinese Socialist doctrine requires that there be no unemployed workers. In an 80 percent agrarian society of 1.2 billion people, implementing this policy poses quite a challenge. In 1978 the Third Plenary Session of the 11th Central Committee of the Chinese Communist Party made the historic decision to set economic development as an official government goal (Sha, 1987:692). The caveat was to do this in keeping with the traditions of Chinese communism. In this respect two key points emerged: 1) the need to observe the four cardinal principles - adherence to the socialist path, leadership role of the Chinese Communist Party, "democratic dictatorship" of the proletariat, and adherence to Marxism-Leninism and Mao thought; and 2) the need to both implement policies that would open the country to the outside world and carry out the necessary reforms at home (Sha, 1987:693-694). This reform policy is being implemented in a controlled way, one which party leaders hope will minimize harmful (to the party) disruptions. In 1982 the 12th Congress set goals of quadrupling gross agricultural and industrial output and increasing the annual per capita income from US-$250 to US-$800 to US-$1000 by the year 2000. Data, indeed, indicates that a measure of success is being achieved. Demberger (1989:21) points out that although the Chinese have achieved impressive growth rates the system is not without its problems. The process can be described as one of intermittent surges of growth and retrenchment leading to an unstable economy. The Chinese government is encouraging limited private enterprise and a return of the cooperative to its original form, i.e., a cooperative run by interested parties rather than party cadres. A serious attempt has been made on the part of the government to remove previously imposed controls and constraints. However, the benefits obtained from true market forces, that is, scarcity pricing and resource allocation, are still unachieved because of continuous government intervention (meddling).

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Lack of a cohesive government policy has produced numerous undesirable consequences. (But who could reasonably expect the vast diversity of old programs and thoughts to adapt to a new philosophy easily?) For example, increasing (albeit modest) levels of private sector wealth have caused investment and consumption demands to far exceed output. This increase in the money supply and the desire of peasants and workers to spend have also resulted in a high rate of inflation. Counterproductively, the government invariably chooses subsidy as its vehicle for combating the effects of such inflation. The government further fuels inflation by setting a rate of foreign exchange which overvalues the yuan (the Chinese unit of currency). Shortages and irrational government pricing have created windows of opportunity for speculators who buy cheaply in one region and sell high in another. Many of these problems are rooted in the unwavering ideology of many Chinese leaders. They are dedicated to maintaining hardcore socialism even as they work to create a free market economy and enjoy its fruits. Most outsiders believe that the two goals are inimical. In strict communist terms, pursuit of material goods is still illegal. One person should not have more than another person. In 1988 The People's Congress reported that China's GNP had gone beyond a trillion RMB (renminibi, the internal money unit of the P.R.C.), nearly double what it was in 1978. And the average peasant's income had quadrupled over the same period (Ching, 1990: ch.l). What the Congress didn't mention was the increasing gap between rich and poor and the almost 40 percent inflation rate. China's people have always been restless - searching for a better way. How long could these disparities and unfair conditions be tolerated (rich and poor, freedom and subjugation)? Eventually, the students, with a great deal of support from the academicians and workers, formed a protest. The world remembers the culmination of this movement as the Tienanmen Square Massacre. But the Chinese government ignored the impact of the event, as demonstrated by the euphemism used within the country to describe it, "The June Fourth Incident". The resultant behavior and attitudes on the part of students and workers is to view the government with disrespect and skepticism and develop themselves outside the system with illegal (as defined by the government) underground unions. Laws have been enacted since June 4, 1989, which prohibit hunger strikes, crying out slogans, or blocking military activity. China's leadership sees only what it wants to. For example, having two different monetary designations, the RMB yuan for citizens and FEC yuan (Foreign Exchange Currency) for visitors, does not trouble the leaders. They view the dual system as eminently reasonable.

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General Institutional Arrangement In order to understand the role of unions and the options of the workers one needs to examine the hierarchy of command in the P.R.C. Figure 1 depicts the three levels of decision making (Henley and Nyaw, 1986:642). The old (pre-1978) system of Chinese State enterprises was pluralistic in that it involved an interlocking relationship among the Enterprise Party Committee, the factory director, the worker's congress or assembly, and the trade union committee. A major problem with this system was that responsibility was divorced from implementation. Effectively, the Enterprise Party secretary (head of the factory communist party, having vertical relationships to those higher up in the communist party) made operational decisions based on Party dogma with little regard to the implications of those decisions. This had a demoralizing effect on management and generated a reluctance on management's part to accept responsibility for production results. The Workers' Congress (or general assembly of the workers) is empowered to recommend the course of action to be taken by the factory in matters such as budget, leadership, reform and worker education. For its part, the trade union (the "transmission belt" of party policy) exerted desultory influence because its worker members lacked motivation due to a guaranteed job and absence of a reward system. Reform under this view has been directed toward balancing the power among the four pillars of the State enterprise system: the factory director, the Enterprise Party Secretary, the Workers' Congress, and the Trade Union. But change is slow. If power among the four can be arranged in such a way that those in charge can respond to market opportunities, many of the problems inherent in the existing, bureaucratic, socialistic system will be resolved. Sha (1987:684) reports that the policy of "profit retention", introduced in 1980, was a small step in the right direction. One percent of net profit after tax could be retained by the factory for development, welfare, and bonuses. A second change involved substituting the policy of taxing enterprises for the old system of requiring attainment of a bureaucratically determined (and usually suspect) profit figure. A contractual responsibility system was introduced. Essentially, only the State's profit share is now specified in advance and the enterprise contractually agrees to this specified quota. Profits above the quota are retained by the enterprise. This system simultaneously guarantees money to the State and presents opportunity to the manager for improving his/her lot, the lot of his/her enterprise, and that of his/her workers. Contractual responsibility is also morale building in that it provides the managers and workers with an authentic voice in the distribution of rewards. The contractual responsibility system has spelled out new roles for the four pillars. The new role of the Party Committee is to function as a supervisory body to oversee managerial activities, to look after the political education of the

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90 three levels [1) national [2) provincial [3) local

Standing sub-committee ^ of vorkera 1 congress and ™ party

Management tea·

1 1 workers' 1 1JP .congress

jA

Trade union ht. .committee

1 1

/ X

Voikers and staff

Notes: — ^ indicates hierarchical command relationship < y - f indicates reciprocai or consultative relationship vindicates links of a weak or unclear nature CPC Communist Party of China ACFTU All-China Federation of Trade Unions Figure 1 : A simplified diagram of the decision-making structure of a Chinese State enterprise, 1984. Source: Henley and Nyaw / 1986:642).

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workers and to provide an appeal body for workers who are dissatisfied with management decisions. It should be noted however, that though an appeal system exists, it is politically dangerous for a worker to use it. Factory directors are currently elected by the Workers Congress and are directly answerable to this body. And for the first time, factory directors have full responsibility for the operations of their enterprises. No longer merely advisory in nature, the Workers Congress has the power 1) to adopt or challenge resolutions submitted by the director on production plans, budgets, etc.; 2) decide on the use of funds and resources including allocation of housing, regulation of rewards and punishments, and welfare of workers; 3) approve the structure of management, wage adjustments, and vocational training; and 4) recommend or reject cadre (management) appointments based on previously (centrally) established criteria. The trade union exists on the same hierarchical level as the Workers Congress. The union works to 1) implement the decisions of the Workers Congress; 2) protect workers' rights and material interests; 3) link the party with the masses; 4) carry out State decrees concerning workers welfare and interests; 5) organize and educate workers for running the enterprise; and 6) provide support for the Workers' Congresses. China currently continues to evolve and develop ways of restructuring and managing her enterprises and people. That which was formerly unilaterally and centrally decided is now being parceled out and the impact of this procedural change has yet to be fully ascertained.

Nature of Labor Relations Process Perspective In the new China all laborers are equal (but not all laborers are equal before the law). Before 1986 lifelong employment was considered the right of a worker and precluded the need for any collective bargaining. With the opening of "free enterprise" zones, joint ventures with foreigners, and generally greater exposure to Western business concepts, this rule of lifelong employment came to be seen as an impediment to improving productivity. In its efforts to resolve this dilemma, the government enacted the "Temporary Regulations". Beginning on October 1, 1986, workers were no longer offered lifetime employment but rather, a fixed period contract. The repercussions were far reaching. The Temporary Regulations called for the following: 1) introduction of a labor contract system; 2) reform of the recruitment system, whereby the current practice of administrative allocation and internal recruitment were replaced by open job-application and selection with objective standards; 3) giving the

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enterprises the power to dismiss workers (including permanent workers); and 4) establishment of a system of social security and old age pensions. 1. Permanent employees. This group includes the overwhelming majority of personnel. 2. Contract workers. Long-term workers (a synonym for contract workers) are typically considered to be employed under a temporary contract while awaiting permanent employment. The period of time can be indeterminant and the contract renewal rather automatic. In many cases conditions of employment for these workers are equivalent to that of the permanent worker. 3. Temporary workers. This designation generally refers to rural or urban residents working under a time-specified labor agreement in an urban area. 4. Seasonal workers. Those who are engaged in seasonal industries (e.g., harvesting specific crops) are termed seasonal. 5. Peasant workers. Initially this stage was used to denote all peasants indiscriminantly. Now there are four categories of peasants: a) rural residents working in township or village enterprises; b) rural residents working in country-run enterprises, factories or mines; c) peasants employed directly by State-run enterprises for dangerous or unskilled tasks; and d) other temporary rural workers. The essential difference between workers and peasant workers is that of locale (city versus rural residency). However, all are employed according to strict government policy with very little choice left to either the enterprise or the individual. Unfortunately, the new regulations which look so good on paper have not reformed this condition. Such lack of change in the worker's lot can be attributed to 1) worker fears of reprisal following any swing of the pendulum; and 2) the ubiquitous Chinese institution, the danwei. For every Chinese, identification with the danwei (the bureaucratic all controlling work-place/social community) governs the life (and death) of the individual. Permission to move, try a new job, transfer to a different part of the country, marry, or have a baby is all granted by the all powerful danwei committee. Even for the food he/she eats, the worker is beholden to the danwei. However, recently developed free enterprise zones have created a new situation - "the game of two choices". In these small areas workers can choose their enterprises and enterprises can choose workers, ending here, at least, the reign of the "iron rice bowl" (guaranteed employment, housing, food, etc.). There is a savory new breed of worker, the entrepreneur, emerging in China. But this group represents a minute portion of workers. If an individual chooses to go out on his/her own, the person is then responsible for providing housing, food, medical care, retirement funds, and education costs. Little support is available in the way of education or camaraderie and relationship to the danwei is withdrawn.

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The Possibility of Collective Bargaining Western style collective bargaining could only benefit the first two categories of workers described above, permanent workers and contracts workers. The other worker categories lack any organization or structure. Also as outlined earlier, some powers which might be termed collective-bargaining-unit responsibilities accrue to the Workers' Congress. However, Henley and Nyaw (1986:645) report that the workers they questioned preferred to place their trust in the Party committee because "at least Party secretaries were part of the State apparatus and could be expected to follow bureaucratic precedents and Party policy directives." The worker will say that self-preservation dictates this prudent choice because of rule by an all-powerful and often capricious government. Presently, the Chinese worker is at the mercy of ancestral tradition. Empowerment of the individual is a concept that has not, as yet, reached the people of the Motherland. Seeking the common good rather than seeking individual advancement, or unit achievement, or enterprise advantage, still prevails. Exposure to Western ideas through exchange programs, foreign visitors, and media infusion will hasten the change. Groups of intellectuals, students and workers will each promote a more enlightened approach to improving productivity.

Strike Activity and Types of Agreements Strikes are not specifically forbidden in the PRC, but they are not sanctioned either. Cheng (1988:38) reports that nearly 100 industrial strikes occurred in 1987. Most of these took place in the Shenzhen (free-enterprise) economic zone. Little information regarding the nature and strength of strikes is available from official sources. Typically strikes are spontaneous and often the organizers of such events are fired for their disruptive behavior and simultaneously banished from their danwei. Banishment from one's own group makes this firing a particularly arduous condition. Survival depends on the bonding each worker has with the others within the danwei (because the danwei provides the worker with a job, housing, food, etc.). The most widely publicized strike in modern China was the Tienanmen Square "event". It was a strike by students, supported by academicians and workers to advance the cause of democracy. However, it was the workers who fared the worst. In discussing government reaction to this event, Morrison (1989:216-217) writes, As the propaganda intensified and the number of arrests multiplied, it began to appear that workers were even more vulnerable to arrest and harsh penalties than students, intellectuals, and bureaucrats. [ . . . ] As a Shanghai court made clear in the first trial related to the

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democracy movement, workers were the first to draw the death penalty for their participation in the movement.

This hardly constitutes an encouraging backdrop for workers to assert themselves. Because of the lack of any specific guarantees within Chinese labor law the citizen sees it as axiomatic that almost nothing can be accomplished through work stoppage. It is elucidating to compare the following statement by Shen, spokesman of the All-China Federation of Trade Unions (ACFTU), to the vehement statements on the rights and purposes of unions by comparable American Labor leaders. "Since we are a socialist State, our labor unions must, of course, be guided by the party but that doesn't mean that everything should be decided by the party. While the party should set policy guidelines, organizational details should be left to the unions" (Cheng, 1988:40). Agreements are, as discussed earlier, the purview of the Workers' congress. This body is quite removed from the day to day activities of the workers. Also, it is recently empowered and in great likelihood staffed by those who have shown loyalty to party policy. It in no way compares to the type of union representation so prevalent in the United States. Littler and Lockett (1983:38) state that "[...] the state is [not] introducing an adversarial system of collective bargaining between management and workers, since the trade union movement is officially committed to working with management and the Party committee to solve problems". The key objective of the Chinese system is to arrive at a consensus that satisfies all parties as long as such consensus does not threaten government policy.

The Industrial Relations Actors Trade Unions There are 380,000 grassroots unions in China with a membership of 100 million. Officially known as Trade Unions these associations are regarded as a work department of the Communist Party and government. Some 90 percent of the workforce in urban, industrialized China, belongs to trade unions. (The majority of the population lives in rural areas and is neither industrialized nor unionized.) Ostensibly membership is voluntary, but almost all join as the result of peer and cadre pressure. Revenues come from a 0.5 percent levy on monthly wages and a 2 percent tax on the enterprise's wage fund (Cheng, 1988:40).

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Chinese labor unions are trying to get out from under the shadow of the communist party and gain the role of representing workers' interests, after years of being little more than a workers' welfare agency and a party propaganda arm. Lack of detailed labor law leaves even dedicated union officials powerless to assist the workers. The owners/directors of the enterprises have a free hand at determining hours, wages, and working conditions. Further, the hierarchical regulations governing the enterprise specifically prohibit the union from taking up workers' grievances. This activity is assigned by the central committee to the Party committee, the "legitimate" line of authority. The expected role of the trade union in China is to provide a political education for the work force (Henley and Nyaw, 1986:649) and although charged with protecting the workers' interests, to co-operate with management. As one-sided as this seems, the power of the union rests in its potential for eliciting extra effort from the work-force. However, what benefits accrue to the union - in addition to nationalistic pride when they are successful - is unclear. Primarily because unproductive workers earn the same amount as productive workers and suffer no reprisal, lack of motivation is a pervasive problem in the Chinese system. Mann (1989) reports as follows on the attitude within a typical factory. The workers are hostile and resentful and willing to express the sentiment that they are exploited. Discipline is lacking and the few safety precautions are ignored as an expression of their feelings of disenchantment. Chinese leaders inside a plant will not (and cannot) do anything to control the workers (as a group). "If the workers didn't want to do something, nothing on earth could make them do it" (Mann, 1989:201). No Chinese work leader dares to play the role of disciplinarian. If Chinese workers don't like one of their supervisors, they can often force his removal. Inside the walls of the factory, the communist ideal of worker control is not entirely a myth. Butterfield (1982:261) tells of a worker who cried at his retirement party because in his 20 years of employment he had never done a day's work in the factory. Rewards such as travel benefits, permission to have a child, and good housing accommodations could be good work motivators but these are not under the jurisdiction of either management or the unions. Instead, distribution of such perks are controlled by the danwei committee and bestowal is usually politically oriented. The Government In the P.R.C, the government "calls all the shots". Indeed change has been legislated, and there has been much rhetoric. The consequences of such legislation have been slow in reaching the worker, partly because of bureaucratic inertia and partly because the direction of the task is unclear. Changes are made and unmade. For example, centralized power was reorganized into regionalized power and then recently (1989) returned to a more centralized structure.

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Significant, however, is the continuing determination from the top leaders to move from a totally State-controlled economy to a more or less market driven system. As far back as the 3rd Plenum of the 11th Central Committee of the Communist Party of China in December, 1978, leaders advocated an open-door policy to the West. The government created Special Economic Zones (SEZs). It encouraged greater reliance on foreign trade and fund raising. Greater emphasis was put on economic incentives. Additionally, joint ventures sprung up. Carefully chosen State-owned enterprises were restructured to incorporate rewards for efficient production, freedom from government pricing, freedom in decision making by factory directors, and use of material rewards (previously an anathema). Standards of production and quality were challenged. Henley and Nyaw (1986:648) present their relationships among the various stakeholders as represented in Figure 1. It is obvious that the role of the Party (government) is present at all levels.

Potential for the Rise of Other Players Given the extreme recency of "free enterprise" and the concept of a worker voice, it is not surprising that to date there are no organized associations for managers, craftsmen and technicians, entrepreneur employers, and expatriate business people. Each group is purposely disenfranchised by a pervasive government policy of divide and conquer. For example, Western parties - even though coming to a venture with the standards and alliances of their home countries - are discouraged from forming local relationships. Factory directors are encouraged to rely on their long term relationships with the government for direction and information. Peer relationship needs of craftsmen and technicians are turned back to their danwei. The new entrepreneurs, being so few in number, are expected, as the price for freedom, to keep to themselves. Third party interventions, such as arbitration, are not part of the system. There is no third party. The government sets all the rules and steps in to resolve crisis issues. Barring the success of a Tienanmen Square type incident, it is unlikely that any other players will emerge for the foreseeable future.

The Future for Industrial Relations The traditional (in other countries) champion of the worker is the trade union. In unity and purpose there is strength, as demonstrated by the bloody strikes in the early years of 20th century America. Obviously Chinese trade unions possess a potential for forcefully standing up for worker rights, simply because they claim the membership of 100 million workers.

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The six major problems to be overcome in order to achieve this potential are imposing. First is the lack of organization at a macro level. China encompasses 380,000 unions. They are for the most part grassroots and parochial in outlook. Because of their lack of unity there is no power at the regional or national level and no way of attaining it (and no communication infrastructure, e.g., telephone system, to facilitate it). For unity to come the leaders must emerge to create national coalitions such as have developed in other industrialized nations. It is not to be expected that the Chinese government will look kindly toward such activity. Such leaders will undoubtedly have to endure great hardship and the constant threat of imprisonment and death. Second is the crucial control of the trade unions by party cadres. The standard policy of union leadership appointment (and removal) by party committee or company directors is designed to produce willing shills. Appointment is reward for loyal party service and the appointee is expected to propagandize and certainly not create waves. Recently Party General Secretary Ziyan spoke out and recommended that union leaders be elected. As a result attempts are being made to institute open election of union officials at shop floor levels. Obviously resistance from the established bureaucracy is formidable and gains are slow. Third is a lack of unified purpose. Many workers fervently believe in strict adherence to socialist doctrine and the onmipotent wisdom of government. The party cadres promote communist education and propagandizement as the purpose. Others see the purpose to simply act as a worker welfare agency. Although more and more a cry to improve the lot of the worker can be heard, the question is how long will it take for this cry to develop into a consensus. Fourth is corruption. The party cadres, understanding the protection they enjoy from their political backers, take advantage of this position to award the best housing to themselves, their relatives, and their friends. Those in need are usually ignored. Those who are disliked are mistreated. There is little that the worker can do in redress. In other cases, the union leader is also a factory manager and uses the union position to further the goals of the factory at the workers' expense. Fifth is lack of power under the law. Currently Trade Unions have no power to bring action against agencies or administrators who abuse the workforce. There are no labor laws. Nothing in the legal system prohibits willful firing, assignment of extra hours, or unreasonable work conditions. Sixth is lack of credibility. Workers themselves do not believe their unions can or ever will be in a position to protect their interests. Rampant corruption at the leadership level, factory managers doubling as union officials and control from without by the party apparatus are all rational justifications for this attitude. It is no secret that it is beyond the power of a union to force an employer to concede to worker demands. There are those who believe that

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worker exposure to foreign business interests will be the catalyst which mobilizes resolve. With the importation of technology, bits and pieces of outside cultural practices will be insinuated. Over time the benefits received by workers who understand and participate in a western-like system will replace the ancient tradition of forbearance. In this scenario, the Chinese government is in a classic catch 22. On the one hand it cannot keep the population content without the economic benefits derivable from massive injections of Western technology and management procedures. On the other hand the Westerners bring with them the "radical" attitudes and ideas concerning the adversarial role of worker and management that promise accelerated disruption of the status quo. There are those who say China is on the verge of its own industrial and worker revolution. In short, they believe China to be sitting on a volcano. If this is true, the question becomes: Can the government draw on its 4000 years of cultural development to manage this impending crisis in an enlightened way? Or will the scenario be played out in a series of ever more wide spread and violent reenactments of the Tienanmen disaster? References Butterfield, F. (1982) China - Alive in the Bitter Sea. New York: Times Books. Cheng, E. (1988) "Getting Back to Basics". Far Eastern Economic Review, November 3, 38-40. Ching, J. (1990) Probing China's Soul. New York: Harper and Row. Dernberger, R. F. (1989) "Reforms in China: Implications for U.S. Policy". AEA Papers and Proceedings, May, 21-25. Henley, J. S. and M. K. Nyaw (1986) "Introducing Market Forces into Managerial Decision-making in Chinese Industrial Enterprises". Journal of Management Studies, 23, 6, November, 635-656. Littler, C. R. and M. Lockett (1981) "The Significance of Trade Unions in China". Industrial Relations Journal, 14, 4, Winter, 31-42. Mann, J. (1989) Beijing Jeep. New York: Simon and Schuster. Morrison, D. (ed.) (1989) Massacre in Beijing: China's Struggle for Democracy. New York: Time Inc. Books. O'Toole, J. (1981) "The Good Managers of Sichuan". Harvard Business Review, 81, 3, May-June, 28-40. Sha, Y. (1987) "The Role of China's Managing Directors in the Current Economic Reform". International Labour Review, 126, 6, November-December, 691-701. Zhang, et al. (1982) "Chengdu Machine Cutting and Tools System Reform". Jingji Guanli, 18, 22-26. Zhou, S. (1982) "Industrial Responsibility System in China". Paper presented at the Conference on China's Enterprise Management jointly organized by the Chinese University of Hong Kong and the Insitute of Industrial Economics Chinese Academy of Social Science, Hong Kong, June.

Czechoslovakia Tomás Jezek

Historical Overview, General Institutional Arrangement Czechoslovakia is a Central European country in which unions have had a long tradition based on the principle of partnership and social democracy. In the twenties and thirties, some unions accepted the ideas of Leninism and began to make revolutionary socialist demands. This trend culminated after World War II and in 1948 when the unions played a significant role in the nationalization of the means of production and in the fundamental transformation of Czechoslovak society's institutional structure into a socialist society led by the Communist Party. In the traditional structure of the market economy before World War II, a number of particular trade unions existed which on the principle of federation created common bodies with very limited authority. But the revolutionary "unions" after 1948 in Czechoslovakia were built as a unified Revolutionary Union Movement (RUM), primarily on the territorial principle, where the role of individual trade unions was subordinated to an all-union council and derived from it. (It should be noted that even in Czech we have a telling language problem when expressing the fact that revolutionary "unions" are a unified organization, which organizes all employees in the whole economy without regard to their various "trades".) The stress on centralism, hierarchic structure, and uniformity were so great that in the period of revolutionary changes after World War II in Czechoslovakia first a central council of the movement was founded and only then did the council start organizing individual unions ! To achieve an understanding of industrial relations in Czechoslovakia requires first of all to take into account the fundamental fact that these relations exist in the institutional framework of a socialist society with central planning. Central planning was introduced in Czechoslovakia during a short time after 1948, as a direct consequence of the victory of the Communist Party and the nationalization of all the means of production, with the exception of land (collectivization of agriculture took place somewhat later). It was developed as a uniform hierarchic organization. According to Stalinist principles, it employs all agents and has at its disposal all resources which exist in society and uses them for fulfillment of a single set of objectives. In contrast to industrial relations in market economies where relations of partnership, exchange, and coordination prevail, in a centrally planned system relations of domination, command, and subordination prevail. No other charac-

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teristic of industrial relations are as important as these and all are more or less directly derived from them. The central planning institution is not an agent which buys the services of the factors of production, nor does it buy the services of labor; it is an agent which adjoins to lower organizational units ("firms") a function and objective, provides them with capital and rewards them according to how this objective is fulfilled. Relations among economic agents are predominantly based on functional and material complementarity which are determined ex ante on the basis of the decision of the central planner. It can be argued that this type of industrial relations, which in a market economy exists within individual firms between managers and employees, can here be extended to include relation between the central authority and lower organizational units ("firms"), within the framework of the whole economy. The whole economy thus becomes a single huge firm. While industrial relations between a firm and its employees in a market economy is created on the basis of a voluntary contract whose essence is that the employee agrees to subordinate himself to the orders and authority of management, enterprises in a centrally planned system do not have the freedom to use capital according to their own choice, i.e., for other purposes than those set forth in the central plan. The relation between the enterprise and the central authority is not based on a contract, but on orders. Although labor relations between an enterprise and its employees are based on a voluntary contract, wages do not represent a cost of the enterprise. They are a cost of the economy as a whole and are determined by the central plan first as sum of money for wages provided to the enterprise as a whole (see below), according to how the "firm" fulfills the production tasks set for it. This sum (the enterprise's wages) is then used for the remuneration of individual employees according to rules also determined by the central authority (see below) and applied by the enterprise's management. The wages of an individual employee thus are not a price determined independently by the supply of and demand for labor in the bargaining process between participants in the market, but are the outcome of a gradual breakdown of the aggregate wages determined by the plan for the economy as a whole, which are in turn determined by the macroeconomic considerations of the planner concerning especially the investment rate, growth, and equilibrium. In order to understand the nature of industrial relations in Czechoslovakia, the fact that when they are described almost all the same terms are used as when describing industrial relations in market economies can be very misleading; in fact these terms have a very different meaning: •

wages are not the price of labor agreed upon in the process of bargaining between equals, but a reward for labor provided by the central authority first in the form of an aggregate to enterprises and then by enterprises to employees, according to their "merits";

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•

unions are not organizations which defend the rights of employees against the interests of employers, but organizations whose purpose it is to support the fulfillment of the plan in the domain of labor relations;

•

employers are just as much employees as those whose work they organize, only their position in the hierarchy is higher up. Even the officials of the central planning agency are wage earners;

•

the government is not an agent whose function it is to see to it that law and order are maintained and which provides some public goods from sources which it obtains on the basis of taxation, but it is a universal owner,

•

enterprises are not organizations producing profits for their owners, but mere organizational units in the hierarchic system. Moreover, individual entrepreneurial functions of such enterprises are divided among various levels of the hierarchy. The number of these levels as well as the distribution of the entrepreneurial functions among them changes frequently in time, because the inefficiency of the centrally planned system is the reason for repeated reform attempts (the first official criticism of the low efficiency of central planning appeared in Czechoslovakia already in 1957, at the session of the Central Committee of the Communist Party). These reform attempts have, however, always represented only an attempt at the decentralization of some decision-making powers and an attempt to reduce the bureaucratic apparatus, but until now they have never cast doubts on the very principle of central planning and/or an approach to the economy as a single organization with the same set of objectives. The inconsistency of decentralization endeavours within the framework of the persisting system of central planning has, of necessity, always led to renewed centralization [editor's note: it is incredible how fast situations can change, isn't it];

•

laws concerning industrial relations are not rules of just conduct (where everything which is not forbidden is permitted); the purpose of legislation is not to protect the legitimate expectations of economic agents or to prevent conflicts among them. Laws in the area of labor relations (just as in other areas of central planning) in Czechoslovakia are understood to be positive orders intended at achieving particular results. As a consequence the area of industrial relations is regulated by a large number of decrees and regulations, which from the very nature of positive law are highly unstable and typically they leave to the central authority substantial freedoms in decisionmaking. Hence it is not possible, nor would it be meaningful, to enumerate in detail all the relevant laws. The impossibility of actually controlling industrial relations (and similarly also other relations), with the help of positive law has led to a situation in which the Czechoslovak Federal Assembly, as the supreme legislative body of the country, has delegated a number of legislative authorities to the Ministry of Labor (and similarly to other government bodies).

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The Nature of the Labor Relations Process The status of employees in labor relations is ambivalent. They have not the strong support in unions which employees in market economies have, in spite of the fact that in Czechoslovakia almost 100% of employees are members of unified unions. Just as in other socialist countries with a system of central planning, unions are not considered to be organizations which represent the interests of employees in the process of bargaining wage rates and work conditions with employers, but an organization whose purpose it is above all to support the fulfillment of the central plan and also to provide employees with certain social services and benefits, such as recreation, care of children, culture and sports, as well as carrying out some other functions which unions have been charged with within the framework of an integrated hierarchic organization of society and the economy (see below). It is assumed that the central plan is drawn up in such a manner that it serves the real interests of employees, i.e., that the planning bureaucracy knows the real interests and needs of employees better than they themselves do. Hence the task of unions, in their own interests, is to cooperate with management and help them. Since management and their employees carry out their jobs within the framework of an economy organized in a unified manner which serves the objectives of the central plan, it is only logical that both management and employees are members of the same unified unions. In Czechoslovakia this includes government officials as well as workers who are all members of the same union. The system of central planning in its model form does not provide any conceptual reasons for the existence of conflicts between the interests of employees and employers and hence does not provide any institutional basis for solving wage conflicts or for holding regular bargaining on wages and work conditions. Both wages and work conditions are the outcome of internal calculations at the central plan level. Possible conflicts, for instance between aggregate money for wages and aggregate consumer goods and services, are only material conflicts which take place within the framework of drawing up the central plan, not conflicts between the interests of the firm to incur minimum costs or the interest of employees to obtain maximum wages, as is the case in a market economy. The central five-year plan in its definitive version, which is assumed to not contain any internal inconsistencies, is in Czechoslovakia adopted as a law by the Federal Assembly. Thus any dissatisfaction of individual employees or groups of employees with wages or work conditions and any attempt to strive for improvements are usually considered to be a breach of the law and an attack against the "real" interests of working people which cannot be served better, ex definitione, than by the "scientifically based" central plan. A strike or an attempt

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to organize one is thus considered to be a criminal act, in spite of the fact that formally, the right to strike exists, (e.g., because Czechoslovakia is a member of the ILO in Geneva). Czechoslovakia is a country in which strikes really do not occur. Yet the non-existence of strike activities has other, more fundamental reasons. Against the fact that employees do not have the opportunity to bargain about wage rates and other work conditions and hence do not use strikes as an ultimate means of forcing their objectives, there exist opposite tendencies, which in fact strengthen the status of employees in labor relations. In a system of central planning, enterprises do not own their capital, nor do they buy it on the money market but receive it through decisions of the central authority. Enterprises gain the right to pay out a specific sum as wages on the basis of fulfilling the conditions set by the plan; usually this condition is a volume of output by the enterprise measured in some specific manner (see below). Thus a characteristic aspect of the relation between firms and the central planning authority are negotiations about this condition, on which the sum of money which can be used for wages depends (in an analogical manner negotiations also take place about the allocation of capital for other needs of the enterprise). The enterprise's management is interested in proving that the tasks of the plan can be fulfilled only on the basis of more capital, while the interest of the central authority is the opposite. In view of the fact that the enterprise's management has a monopoly on knowledge related to the firm's production function, the central authority in negotiations concerning the allocation of capital is always the weaker party. In this context, what is essential is that the interests of the enterprise's management and that of its employees are identical, i.e., they both have an interest in the maximum allocation of capital (this is sometimes referred to as a "sucking" reflex). The logic of the institutional pattern and functioning of relations in the system of central planning thus is the cause of a situation where the management of a socialist enterprise behaves in a manner similar to that of leading union officiais in a market economy. Capital, whether it is intended for paying labor or for financing investments or other items, is thus from the point of view of management and employees of the enterprise an externality, because in a socialist society ex definitione no other agents exist who would derive their personal income from the ownership of capital. Capital is nobody's cost. The coalition of employees and management has thus gained the power to use substantial parts of capital for their own benefit. In other words, the interest of a firm's management to maximize money profits for the owners of capital has been strongly attenuated because this owner is society as a whole, i.e., no other identifiable person or group of persons. A socialist firm, just like any other enterprise, maximizes its utility. But the attenuation of property rights has led to a situation where only a part of this utility has the form of money profits, while the other part has the form of non-monetary benefits accruing to a coalition of management and wage earners,

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most frequently in the form of low labor effort, shirking, utilizing the enterprise's equipment for private purposes, stealing, etc. There is another important factor, which also strengthens the status of wage earners in labor relations in Czechoslovakia: the existence of permanent over-full employment, i.e., the existence of disequilibrium in the labor market. Over-full employment has both macroeconomic and microeconomic causes and is the summary outcome of a policy that prescribes monetary looseness, maximum rates of growth, and the behaviour of firms which strives for the maximization of resources, including labor. Over-full employment is also strengthened by socialist ideology which stresses the right of everyone to have a job (this right is written into the Czechoslovak constitution) and leads to a situation where cases of somebody being fired because of poor labor effort are extremely rare, if they exist at all. Given the existing disequilibrium in the labor market, employees easily find a firm which for a given labor effort is willing to pay a higher wage or allows a lower labor effort for a given wage. In summary, this means that in spite of the fact that employees in the centrally planned system in Czechoslovakia do not have the strong support of unions which employees in market economies have, the logic of the existing institutional framework, economic policy, and ideology lead to a situation where in fact in industrial relations a strong dominance of wage earner rationality exists at the cost of the recipient of profits whom the planning bureaucracy represents only in a very weak manner. The interest of the profit recipient is defended weakly because its rationality is merely simulated by political responsibility. The fact that employees in Czechoslovakia represent the stronger side of labor relations does not of course mean that in the long-term the economic process takes place in favour of the labor side. Quite the opposite is true. The non-existence of the entrepreneur and/or the non-existence of the owner of capital, i.e., the existence of a system of central planning, has led to a long-term and permanent decline in the relative economic level of Czechoslovakia.

Industrial Relations Actors T h e Role of the Unions During the last 40 years a long term trend has been in evidence for a decline in the number of particular trade unions where they have been gradually combined into large, greatly heterogeneous unions (for instance there is now a single union for the employees of the chemical, paper and pulp, glass and printing industries). In spite of the fact that the bureaucratic nature of the RUM, created for the purpose of revolutionary transformation on a territorial principle, has been frequently criticized and attempts have been made to increase the role of

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individual trade unions motivated by the requirements of day-to-day economic life, it seems clear that up to the present the RUM in Czechoslovakia still has the structure and logic of functioning developed at its founding after World War II. The RUM precisely copies the territorial organizational hierarchy of the Communist Party and the government (just as other "social" organizations of youth, women, sportsmen, etc., do). At each level of organization of the Communist Party there is a relevant level of the RUM hierarchy. A second, traditional and less significant principle according to which the RUM is organized, i.e., according to particular trades, again roughly copies the structure of branch ministries in spite of the fact that the number of branch ministries has always been smaller than the number of individual trade unions (there are 18 trade unions at present). The leadership of the RUM, just as the leadership of all other organizations in Czechoslovak society, is at all levels of the hierarchic structure controlled by the Communist Party. The principle of the leading role of the Communist Party is written into the Czechoslovak constitution [Author's note: this principle has been stricken in its entirety]. An important characteristic of the role of unions in Czechoslovakia in the area of labor relations is the hierarchic division of labor between it and the government. In the process of drawing up the plan the government decides all substantial problems of wages policy and the allocation of labor. On the basis of this division of labor, the unions are given the task of applying these large scale decisions in individual enterprises and work places. The government decides in a monopolistic manner on questions of principle, the unions at the local level on details. The focus of activities of unions in Czechoslovakia is at individual work places, where in the solving of particular problems connected with labor relations the unions in fact have a dominant position (for instance in problems connected with work norms, bonuses to wages, overtime pay, etc.). An important difference exists in comparison to unions in a market economy where the focus of union activities is concentrated on bargaining between unions and employers on basic issues with the possibility of a conflict developing and where management has and must have substantial freedom in implementing the agreed upon principles. The hierarchic division of labor between the government and/or management and the unions in Czechoslovakia leads to a situation where these agents have a tendency not to enter into conflicts in questions of principle. Conflicts, when they do arise, are of necessity dispersed to individual work places, concern only a very small percentage of workers and concern only partial questions of wages and work conditions. The fact that the focus of union activities is at individual work places is often even presented as an expression of democracy in spite of the fact that it seems evident that industrial democracy is only a false substitute for the non-existence of democracy in society as a whole. Enterprise's committees of the RUM have the right to participate in the decision-making of enterprise's management and to monitor whether the latter is

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sticking to all the relevant rules. This co-participation in decision-making concerns especially the following. • • •

determining the number of employees at individual work places; a break down of the annual sum of money earmarked to the enterprise by the central plan for wages to lower organizational units; carrying out measures in the area of remuneration (changes in the wages system, changes in performance norms, the use of various types of wages, conditions set for the payment of bonuses, etc.).

The final decision concerning these problems is formally the prerogative of the enterprise's management which does not have to take the opinion of the enterprise's committee into consideration. If a manager does not discuss any measure with the enterprise's committee in an area in which the regulations require to do so, he is not adhering to his work obligations, but nevertheless the measure is valid. But as we have already indicated, the real power of employees in such situations is greater than would be expected on the basis of the firm's committee's formal and legal rights to participate in the making of decisions. Besides participating in decision making in the area of labor relations a number of other functions and activities have been delegated to the enterprise's committee, such as cultural and educational work, the organization of inventors' and improvers' movements among the enterprise's employees, and in cooperation with the enterprise's management care of employees' welfare (catering in the factory and dining rooms, hygienic facilities, recreation, housing, kindergartens, etc.), as well as cooperation in the area of labor safety. A very typical activity which unions in Czechoslovakia undertake is the organization of so-called socialist emulation between individuals and work teams for the best fulfillment of the plan which is supposed to be a substitute for the non-existence of competition on the market.

T h e Role of the G o v e r n m e n t The role of the government in the area of labor relations is totally dominant. Just as in some other countries, there exists also in Czechoslovakia a ministry which specializes in labor problems. But in contrast to market economies, where this ministry is usually charged with organizing the labor market and the creation of general conditions for labor mobility and for improving qualification, in Czechoslovakia this ministry has legislative authority to determine, in cooperation with the State Planning Office everything that in a market economy would be the subject-matter of contracts between parties on the labor market, as well as to determine some other parameters which are specific for a centrally planned economy. The Ministry of Labor determines the following:

Czechoslovakia

•

•

•

• •

• •

107

the method by which enterprises obtain the sum of money earmarked for wages (in cooperation with the State Planning Office, which carries out macroeconomic calculations and decides on the total volume of money for wages and its breakdown, see below); wage rates, which are uniform for the whole economy. These rates have 9 qualification classes for blue collar workers and 21 classes for technical and administrative employees. A total of 7 basic wage rates scales for workers and 5 basic wage rates scales for technical and administrative employees exist. Various scales exist for various industries and various work conditions. Wage rates (as well as wholesale prices) are stable for long periods of time (10 and more years), and are changed all at once, as a general reform. After a reform of wage rates has been carried out, the share of wage rates in total wages gradually declines (the long-term average rate of growth of money wages is between 3 - 5%), while the share of various additional remunerations to wage rates in wages, where the decisions of the enterprise carry more weight, increase. In this way the direct influence of the government on relative wages is weakened gradually. In spite of the fact that the government continually attempts to determine wage relations (just as it does with relative prices), its main concern is not relative wages (and prices), but a regulation of the wage level through the regulation of the sum of money earmarked for wages (see below); supplements to wages and substitutes for wages and the conditions under which they are provided. These include supplements for exceptionally heavy work and work hazardous to health, for overtime, work during holidays, work in preferential industries and areas, etc.; the principles for paying bonuses', qualification catalogues (for blue collar workers) and occupational catalogue (for technical and administrative workers). Entries in these catalogues contain the name of the occupation, its numerical code, qualification level and classes of wage rates. It also contains a brief characteristic of the occupation, the qualification prerequisites for holding such a job and typical examples of work activities included into individual wage classes; the principles for using individual types of wages (time rates, piece rates and their various combinations or alternatives); the principles for the creation or change of work norms (these are given even in the form of a government decree).

Because regulating the sum of money intended for wages in individual enterprises is a specific characteristic of centrally planned economies, and at the same time in Czechoslovakia it has a determining role to play in labor relations, we shall deal with it in more detail. The system of central planning creates several types of money which are mutually not exchangeable; one type is money earmarked for wages (the

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enterprise cannot use other types of money for the payment of wages, for instance money earmarked for the purchase of material). Regulation of the sum of money intended for wages has the following objectives: •

•

•

to maintain the most important macroeconomic proportions, especially proportions between the growth of national income and the growth of the total money income of the population, of which approximately 70 percent represents income from wages; in this way equilibrium between supply and demand on the consumer goods and services market is maintained; to create a warranted relation of wage levels between various industries, within industries, among various trades and within various trades among individual enterprises; to stimulate enterprises towards fulfilling the plan of output (the sum of money for wages is the "wage" of the enterprise).

The sum of money for wages is defined annually by the central plan, either on the basis of a regulator or a limit. This is done by the decomposition method, i.e., a sum is determined for the economy as whole and for both republics within the Czechoslovak Federation, this is then broken down for individual branch ministries and finally for individual enterprises (enterprises then continue this decomposition logic by breaking down their sum of money for wages into sum for individual organizational units within the enterprise). The regulator in this case is the ratio between the sum of money for wages and the nominal output of the enterprise, minus material costs and depreciation (for instance 40 percent). Several alternative methods of measuring output exist for various types of enterprises, sometimes a regulator based on the ratio of incremental values of both these magnitudes are used. The limit defines directly the sum of money for wages, in an absolute sum of money.

Current Trends in Industrial Relations At the beginning of the nineties, Czechoslovakia finds itself in a contradictory situation. In spite of the fact that as a consequence of an orientation towards a system of central planning, a substantial decline in relative economic level has occurred, economic reform is taking place in a very guarded manner, and even the most evident drawbacks of the system of central planning are being abandoned with great caution and with very little scope provided to market forces. In spite of the fact that the long-term decline from previous relative economic positions would warrant a very radical economic reform in the direction of renewing the principles of a market economy, strong short-term reasons for radical reform are nevertheless lacking: there is an adequate equilibrium on the market for consumer goods and services, so that so far,

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serious reasons for annulling the "social contract" between the government and the working people concerning mutual tolerance for a low labor effort on the one hand and permanent shortages on markets for various particular products and service on the other, do not yet exist. There is a real danger that Czechoslovakia will find itself in the trap of a slow and stable relative decline. Nevertheless, Czechoslovakia has started on the path of economic reform, even if in a hesitating manner, because long-term decline is creating an accumulation of problems (the environment, domestic debt, the extremely high material and energy intensity of output, the inability to export a number of commodities to traditional markets, etc.) which in view of the inertia typical for the functioning of the economy are becoming dead ends. From the point of view of industrial relations, economic reform has already led to some particular changes. Further changes can be expected if and when the logic of a market orientation of the reform will make its appearance. These would include: •

•

•

•

the implementation of a policy of structural reform (to put it briefly more services, less heavy industry) which is now beginning to be implemented will require greater mobility of labor. The legislation of a new Labor Code in 1989 has thus simplified the possibility of giving notice on a labor contract by both parties to the contract and at the same time generally strengthened the position of management in the area of labor relations, in comparison to the previous situation where the interests of employees, interpreted in a narrow manner were protected by providing the security of a stable, guaranteed, life-long job; possible appearance of some structural unemployment. Institutional arrangements are now under preparation for the re-qualification of employees and for providing them with social benefits; new legislation (on State enterprises, on central planning, on taxes and others), will make possible a somewhat greater autonomy of firms in relation to the central authorities after 1990. If economic policy will in fact be directed at the targets which for the time being are only hesitatingly proclaimed, i.e., the convertibility of Czechoslovak currency, the liberalization of imports, the creation of a money market, facilitating the capital participation of foreign firms, and if the principle of competition and entrepreneurship is really rehabilitated, then we can also expect stronger pressures for lower wage costs, for improved labor efforts and as a consequence of this also greater wage differentials and a decline in the social aspects of remuneration; the new law on State enterprises introduces the principles according to which the employees of an enterprise elect the director of the enterprise (a

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France Laurent Goater and Frederic Richer

Historical Overview French people always make a point that nothing is like France. This may in fact be quite true for labor relations. Industrial labor relations in France are very different in attitudes and culture from those in most other developed countries. A very rural country that missed a great part of the early industrial revolution, 19th century France was not an industrial-intensive country, except in the Northeast. Even though the Lorraine-area coal and steel industry and Belgianborder mills would have inspired Charles Dickens, and ultimately did create the environment from which Leon Blum's Socialism and the powerful CGT (General Confederation of Labor) grew, most of the French countryside was still peacefully farming at the turn of the 20th century. Many of the present rules and laws that apply to industrial labor relations in France come from 1936. The Popular Front, a coalition of Communists, Socialists, and radicals led by Leon Blum, was elected after massive strikes blocked the country. Since then, the government has been very involved in all areas of bargaining and regulations between workers and companies, along with establishing a public system of social protection that ranks among the most complete in the world. France went through two critical social "events" since the end of the Second World War: The General Strike in May 1968, and the first year of François Mitterand's presidency that started in May 1981. In 1968, the whole country seemed to join in the worldwide protestation movement that was caused by a mixture of sour feelings against the Vietnam War, distrust in communism that had recently moved to bury the Hungarian Spring, boredom with the consumer society, and even exceptionally nice weather. Certainly, the continuous economic expansion since the 1950s was producing too many uncured frustrations that, in a typical Latin manner, had to come to a head. President De Gaulle, who symbolized the classical, responsible equilibrium, was unable to restore confidence; but the new Pompidou government negotiated the Grenelle Agreements, granting a general pay increase, better working conditions, and added protection to employees. When François Mitterand was elected President in May 1981, France had been managed by Conservatives since 1938. Pharmacists in the nicest neighborhoods ran out of tranquilizers, and business people were fearing that François

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Mitterand would implement totally his very Socialist 110-points program. Pierre Mauroy, Mitterand's first Prime Minister, implemented a very Socialist program, that along with radical social improvements, emptied the country's reserves and dramatically increased the unemployment rate. Most banks and ten major companies were nationalized, the number of working hours was lowered from 40 to 39 hours/week, taxes were increased on higher revenues, and many more "Socialist" measures were enacted. The public sector was greatly enlarged and accounted for 1/4 of all civilian jobs. A bit more than a year later, the country was in such bad economic shape that Mitterand had to implement a rigorous plan to cope with the problems. Wages were frozen and a large number of measures were passed to block collective bargaining, to the advantage of employers. After three years of two-digit inflation and three devaluations of the French Franc, the President appointed Laurent Fabius to form a new government with an even more rigid austerity program. Socialists suddenly accepted the logics of capitalism and tried to rebuild the economy. The Communists, far from following the moves of their Italian comrades, even radicalized their ideology, left the coalition, and denied the inevitability of Socialist evolution. Most of the measures passed in the early 1980s are still in place and help explain the healthy condition of the French economy. The result has been a rather "non-Socialist" economic situation: the Franc is becoming a hard currency, companies are more and more profitable, and unemployment tops 2.6 million. Socialist but wise, François Mitterand, who is known to dislike economics, actually owes most of his political power to these rather Conservative economic results.

The Players in Industrial Relations in France The French people are sometimes known for their inclination to three-way relationships. Their labor relations also involve three main players: unions, businesses, and also the government.

Unions Unions are the most visible operators in the labor relations scene. Union density in France has been decreasing since its peak in the 1920s; but there are still a handful of major unions. The CGT (General Confederation of Labor) was created in 1895 and became independent from the Socialists' political parties in 1906. It has been the major union in France up to the recent two years when the wreckage of the French

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Communist Party made its own Marxist-Leninist ideology obsolete. Its approximate membership in 1988 was 1.3 million. The "Cadre" section, called UGICT-CGT, includes about 300,000 supervisors/managers and engineers. This is the most left-wing union, with representation in all industries, but especially powerful in traditional industries like mining, steel and metals, docks, and electricity and telephone utilities. Its present General Secretary is Henry Krasuki, an old-guard Stalinist who should leave office in January 1992. The CFTC (French Confederation of Christian Workers) is the second-oldest union in France. Created in 1919 with a strong Christian-Democrat ideology, it was a peacefully influential union well represented in smaller companies. A majority of the membership split away in 1964 to create the C F D T (French Democratic Confederation of Labor) and is now a 250,000 member union known for its moderate attitudes. The CFDT had about 800,000 members in 1988. It rejected the Christian ideology of the CFTC for a more Socialist ideology. It is now presided over by Jean Kaspar. The C F D T is strongest with the utilities and industries like metals, chemicals, and textiles. Another major competitor of the C F D T is FO (Worker Force). Created in 1947 from a split with the CGT, FO is less connected with political parties and its ideology is clearly anti-Communist, thus not at all Socialist. A major part of F O ' s million members work for the utilities or public transportation, but the union is also represented in banking and other service industries. The most important specialist union was also born in the 1947 C G T split. The FEN (National Education Federation) represents half-a-million public-sector school employees, from teachers to directors. It is a strong union because of its density and informal links with the French Socialist Party which has ruled the country since François Mitterand became President in 1981. Finally, the CGC (General Confederation of Executives), created at the end of the Second World War, represents about 300,000 "Cadres" (executives, and in a broad sense, every person with some significant responsibility or skills). It is directed by Paul Marchelli. Executives tend to stay out of unions, thus the CGC mostly represents lower-level managers from large companies (including State-owned multinational enterprises) and sales people. The CGC tries to distinguish itself from other unions by claiming independence from political parties and maintaining significant distance from Socialist ideas. A few smaller unions exist, for example, some company unions, like the CSL in Peugeot SA. Farmers and farm-workers, which account for less than 10 per cent of the work force, are organized in two unions: the FNSEA (National Federation of Farmers) and the CDJA (National Center of Younger Farmers). Historically, most strikes and labor-movements in France, as well as collective bargaining, have been affected by three main factors: First, since no single union really represents the working population in France, most action has required a coalition involving at least two of the three major unions, CGT, CFDT, and FO.

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Table 1: Voting intentions of unionized workers for the parliament election of March 1986

PCF Other PS Other UDF/RPR FN Unexpressed

Communists Communists Socialists Socialists Conservative Extreme Right

CGT

CFDT

FO

France

60% 2% 22% 1% 8% 6% 8%

12%

6%

63% 2% 19% 3% 9%

34%

11% 2% 33% 2% 44% 10%

54% 5% 9%

Source: Mariaux (1986).

Second, the influence of the political ideology of each successive government on the composition and strength of those coalitions has been created within the very complex and subtle relationship between political parties and unions, as illustrated by the data on the voting intentions of unionized workers in Table 1. The many financial, ideological, and political ties between unions and parties have created many lingering habits among the French population. French unions, influenced by the style reminiscent of the Popular Front, have resorted to the use of nation-wide strikes and demonstrations. Many of the major strikes of recent years were more organized in order to weaken governments than to directly support workers. Issues of conflict with the large unions, for example with the steel strikes and at Renault, have been elevated from being merely local issues to being ideological struggles between capitalism and the working-class. Finally, as in many countries around the world, the influence of unions in France has decreased dramatically during the last decade. Individualist younger workers do not seem to join unions the way their parents did. In a country that was at the roots of the creation of the European Economic Community, younger workers are seemingly more concerned about the competitiveness of their companies, and consider the unions' exceptionally old-fashioned ideologies as a threat to on-going economic development. The natural result is that younger workers now prefer economic to social values. For example, they are very interested in profit-sharing plans and they want to become shareholders and thus they are less interested in striking, as shown in Exhibit 1. Finally, the dream of a Socialist society, after 35 years of Conservative government, was ruined when François Mitterand resigned himself to implement a rigorous plan for economic development. In 1984, the Communists had to leave the government. They had failed to prove that they could improve the workers' living conditions. Consequently, unions (as identified and aligned with Socialist and Communist ideas) lost an important part of their credibility.

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France

Years o Strike days

+ Union membership

• NB shareholder

Exhibit 1 : Strikes, unionization and capitalism Source: Rosanvallon (1988:21); all numbers in thousands.

Government To understand the role of the government in French labor relations, it would be worthwhile to review some important historical movements. The existence of unions in the 19th century contributed to modification of the conditions of interaction between the government and the society, more heavily integrating social issues into politics. During World War I, the focus on defense and on national cohesion pushed government officials to offer C G T ( the main union at that time) some representation, at high levels, in many economic and social organizations, e.g., work committees in ammunition companies, and, among

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others, recruitment services for labor. In 1919, technical education departmental committees were created, in which the unions had an important role. This movement even accelerated after World War II and unions are now actively participating in hundreds of public and parapublic institutions. The participation of unions in national institutions gives the government some flexibility in dealing with society. In fact, the absence or the sudden disappearance of such social organisms would be problematic: the administration would be forced to considerably extend its intervention power. This is the reason why French governments have not hesitated to affirm they are supportive of strong unions. Even though they can sometimes strongly criticize union attitudes, they know that without them they could face difficulties in interacting with the public. Therefore, an ambiguous governmental attitude towards unions is felt since one day the government regrets the unions' "disrupting" effect, and the next day it compliments their "constructive" side. After the nationwide strikes of May 1968, which paralyzed the whole country, the Pompidou government initiated what was called the "Accords de Grenelle". It called representatives of both employers and employees to meet with the Prime Minister, assisted by the Minister of Social Affairs and the State secretary in charge of employment problems, in order to solve the social crisis that revolutionized the country at that time. Negotiations were held on many issues, as discussed in the next section. The guaranteed minimum wage (SMIG) would be increased by 3 Francs an hour. Salaries of the private sector would be increased by 7 percent in June 1968 before being increased by 10 percent in October 1968. Working hours would be progressively reduced in view to reach, in the near future, the goal of 40 hours per week. Furthermore, collective conventions would be revised in order to simplify professional classifications, and most importantly, eliminate sex and age discrimination. The Prime Minister promised to increase credits for employment services and to give priority to means to develop training programs for the young. Unions would be given the right to reaffirm themselves with the guarantee to freely constitute unions including more means of communication (i.e. freedom of distribution of union press and fliers) and an office within companies. Regarding family aids, the government studied a project in favor of families with at least three children. Today, more than twenty years later, the "Accords de Grenelle" still stand concerning all the elements listed above. Of course, the SMIG has been increasing since 1968. The period since 1968 has seen a new political and social era for the French nation. France has been politically managing the economy through a quinquennial planning system. The Vlth plan in 1971 under Pompidou was deliberately ambitious after emerging from the May 1968 episode. The application of this plan was aimed to increase national output in five years by more than one third, individual consumption by one fourth, social expenses (especially in favor of the most disfavored categories - the elderly and the handicapped) by 50 percent

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and finally, collective infrastructure - roads, schools, hospitals, etc. - by more than a half. The main goals of this plan were to increase the industrial strength of the nation in order to have more independence, develop new solidarities for a more equal society, and finally, to bring a better standard of living to all French. The next critical change in French politics came with the election of the Socialists, bringing Mitterand to power in May 1981. With the participation of Communists in the first government, unions were pleased but the economy was shaky. Upon arrival, the Socialist-Communist coalition implemented a set of social laws written by Martine Aubry and known as "Auroux Laws". Temporary and part-time employment had to obey strict rules, the law on 39 work hours/week and 5 weeks of vacation was passed, workers were given more rights within their companies, and salaries and work time had to be negotiated collectively (this law was inspired by the U.S. Wagner Act of 1935, during the era of the "New Deal"). Now, ten years later, Mitterand seems to understand the benefits of a liberal economy with a strong French Franc and low inflation (since 1986). Companies have become healthier, due to the injection of capital, management autonomy for the nationalized groups, and reduction of taxes on reinvested income. After his reelection, François Mitterand did not even change the liberalization measures taken by the Balladur government, such as freedom of prices. One of the most important recent (1988) laws ratified by the parliament is the R.M.I. (Revenu Minimum d'Insertion) or minimum income support. This law was strongly supported by the Socialist government and by the Communists in response to more intense and diffuse poverty in France. The objective was to give individuals the right to have decent means of existence in order to facilitate their professional and social insertion into society. It is not a salary given by society to an individual to motivate his/her effort toward such incorporation. It is an unconditional guarantee of resources from which is defined an insertion process. R.M.I, can only be suspended in case of the beneficiary's unwillingness to proceed to the insertion proposed to him or her. This insertion can be of three forms: social insertion, helping the beneficiaries of R.M.I, to develop their social autonomy and to better assume their personal lives; professional insertion, in forms of training to acquire or improve professional qualifications; and finally, economic insertion. R.M.I, undoubtedly represents a substantial effort to fight poverty but has some shortcomings. The level of R.M.I, is limited to 80 percent of the SMIC (minimum wage) but it is impossible to adjust it to real needs. A single person without any resources would have a housing allowance of FF 1,193, which may or may not be adequate, since housing expenses are variable according to individuals or to their area of residency. Furthermore, the R.M.I, is not accessible to individuals under the age 25. In 1989, there were at least 300,000 beneficiaries including 118,000 individuals or couples without children and 49,000 individuals and couples with one child, meaning that in 80 percent of the

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cases these people do not have access to family aids. The number of beneficiaries has increased to approximately 400,000 in 1991, supported by a budget of FF 17 billion.

Business Labor is not the only social category to be organized on a nationwide basis in the form of unions. Similar to Chambers of Commerce in the U.S. or to some pressure groups with close political ties, most employers in France (71 percent) have organized themselves into a main confederation called Conseil National du Patronat Français (CNPF) or National Counsel of French Employers, presided over by François Perigot. Its main objective is to define and design development policies for industrial and commercial groups to the general interest of all employees, investors, and consumers and to favor the social and economic progress of the nation. In order to reach this objective, the CNPF has to represent all its members to official groups, to public opinion, and to employees' confederations as favoring social and economic progress. Furthermore, it has to promote the progress of companies' management and ensure vital cohesion among all its members. Other marginally-important employer organizations include the CGPME and the CIO-UNATI. Unlike the labor unions, employer organizations such as CNPF, which is the most significant one, and CJD (Centre des Jeunes Dirigeants - Center for young Chief Executives), and "Entreprise et Progrès" (enterprise and progress), which are smaller groups, are not facing a downward trend. These groups, though close to the more liberal political parties, are supposed to be politically neutral. They are not confronted with the decline of a political party such as the Communist party which is disintegrating in France and contributing to the drop in union membership. In addition, with increased competition and the advent of EC 1992 (the removal of trade barriers throughout the EEC by the end of 1992), the need for close ties with public officials at the parliamentary level has been increasingly felt. Therefore, employer organizations are now even stronger. It is easier today for businesses to accept unions since the power of the latter is crumbling dramatically. In fact a new quasi-union universe is emerging from the identity crisis facing the unions. We can consider these quasi-unions as specialized associations or unions that have gained better business acceptance. They have emerged as a response to the inadequate adaptation of traditional political representation of the public's interests by unions. This phenomena started in the 1970s with the rise of "ad hoc" associations to counter specific problems (e.g., defense committees). In most cases, though, the attraction of membership is no longer widely held. For example, the Union Fédérale des Consommateurs - federal union of consumers - has a limited number of

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Comité d'Entreprise. In companies of more than 50 employees. Comprised of Union representatives and management. A meeting every month about administrative and labor issues. At least 2 representatives of employees. Only if everybody agrees, work force reductions can be discussed. Every three years, fringe benefits are discussed. Representatives of Employees. In companies of more than 50 employees. Elected by employees, during management-organized elections. At least 2 delegates and 2 alternatives. Convention Collective. The major Collective Bargaining text negotiated by industry. Conseil des Prud'Hommes. Parallel jurisdiction that deals with labor conflicts. Jury is elected within the area, about 500 areas in France. Every stakeholder can ask for Prud'Hommes. Exhibit 2: Summary of Social Bodies in France Connected to Industrial Relations.

officiai members, but sells about 300,000 copies of its magazine, "Que Choisir?". These quasi-union organizations serve a functional interface purpose. In 1984, for example, the law that reorganized the banking profession created a consumer committee to discuss relations between banks and their clients. Banks felt the need for such an organization and it is this mediation need between important bureaucratic institutions and the population that imposed the constitution of interfaces. Both businesses and the public have therefore reached some degree of effective compromise that satisfies both parties. Exhibit Two summarizes the characteristics of the major social parties involved in the industrial relations system in France.

Labor Relations Process As we have seen, unions in France are neither large nor economically powerful. Yet they are very important and politically powerful. Two major reasons explain this power: a large role provided by the legal system, and their ability to launch large strikes. Collective Bargaining Most of the collective bargaining process in France takes place at the industrylevel. The very founding concept of this collective bargaining is the "convention

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collective", or collective agreement, that is signed by industry. Unions are to represent the complete work force of the industry and defend their interests. A major element is that unions object to any "backward moves", under the theory of the sacred rule of "Acquired Advantages". This tends to block some of the evolutions made possible by technological changes, like in railways, steel, or docking industries. The unions prefer this industry-level process to a more decentralized system which would increase their number of internal disputes and lower their perceived overall influence. They can order industry-wide strikes to defend "Acquired Advantages" and threaten powerful employers. The government is very present and overlooks these negotiations, through a variety of politics, laws, plans, control devices, and sometimes subsidies. They take advantage of this process of influence to push their economic and social policies, controlling costs, development, unemployment, and inflation. The government tends to ask wealthy industries to increase wages and employment to support the economy, but negotiates reorganization plans in shaky sectors. This is a very powerful tool, that proved its efficiency during the austerity times of the mid-eighties. The power of the government is also improved by the weight of the public sector, in its role as a major employer and investor. Finally, companies, represented by the CNPF, know that all the new costs or measures they accept will also be born by competitors, therefore keeping national competitiveness at the same levels. They also risk fewer strikes, with France actually enjoying fewer days lost to strikes than most of its European counterparts. These collective agreements are actually quite consensual in their development and thus are usually followed quite closely by the signatory companies. Some exceptions do occur, with a few agreements even applying to several industries. Indeed, the government is promoting - rather unsuccessfully multi-industry agreements, but overall the system works well and is one of the major reasons why industrial relations between management and labor stay quite healthy in France. At the company (local) level, there are therefore few bargaining issues of importance. Most of these issues are dealt with at the Comité d'Entreprise, the Company Committee. All but very small companies are required to create a Comité d'Entreprise. This committee is constituted of elected representatives from employees, which receive compensation from the company for time spent on the committee, and management officials. The committee is involved in negotiating new labormanagement relations, but there is no usual contract negotiating. By law all advantages granted by companies to their employees usually cannot be terminated. There are very complex governmental (legal) guidelines that companies must follow. Unionized companies will have representatives that usually belong to the "cellules syndicales", the official boards created by each elected union within the company, and partly financed by the firms.

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E c o n o m i c Bargaining Issues Government guidelines are quite tight on pay issues. Unions would quickly strike for any abnormal lag between a company's pay level and the industry's, so most companies keep up with regulations. Pay is increased by the administration every year, this increase being at least followed in most industries. There is a minimal pay rate (SMIC) that is increased quite often; by law nobody can be paid under it. It was FF 31.34 an hour, (about 5 US $) in 1991. Lower skilled employees are usually paid a multiple (1.00 to 2.50) of the minimal guaranteed wage (SMIG). First-level supervisors are either paid according to this same system or as a fraction of the "Cadre" basis. A coefficient system is more and more used across the board, with the value of the point following the SMIG or government-negotiated increase, and the number of points, dependent on position and promotion. "Cadres" are commonly defined as all the individuals with higher education, responsibility, and/or pay level. They fall into a class in which mandatory regulations are a bit fewer, automatic pay increases are the norm, and there is a heavier stress on promotion. Pay is still largely a function of position, location, and seniority. Pay levels are higher in Paris, but there are fewer differences between industries than in the past when banks and large companies included merit and productivity links to their pay structures, which is fiercely objected to by unions.

N o n - e c o n o m i c Bargaining Issues Job security only exists in the public sector. However,the French system is very protective of employees, so companies only fire when they do not have alternatives. Because of that situation, job security is not so much of an issue. However, unions do go on strike when they think a company hasn't tried hard enough to keep its employees when under economic problems. The law is also very strict with regard to the length of the work week, overtime, shifts and the structure of the workday, weekend work, etc. The unions tend to resist change and increased flexibility. But modern technology and increased competition are pressuring employers to find ways to deal with many new problems, inside or outside of the traditional, centralized bargaining and legal system.

M a n a g e m e n t and Union Rights Unions are quite powerful in the French culture, which is labor-favorable and whose legal system gives guaranteed representation rights to major unions.

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Firms are expected to have enough financial power to defend themselves, but they used to be looked at as the "bad guys" when there were conflicts. Unions have rights to strike in all sorts of ways, but management does not have any right to break a strike by force or by hiring short-term strike-breakers. And they cannot fire anybody on strike, unless the strike is illegal. A very important element is that companies do not usually need all unions to sign an agreement on a proposal. A single signature from one union is enough in most cases. Moreover, companies are not obliged to reached agreements. Some unions, like FO, play the cooperation card and negotiate agreements that they sign. Other unions, like the CGT and, sometimes, CFDT, therefore can continue to fight against management without really hurting the companies or their employees. This creates a two-level atmosphere: unions and management always seem to fight intensely on all subjects, yet agreements are negotiated in the background at normal pace. This is a key issue for understanding industrial relations in France.

The Negotiating Process Unlike in the U.S. company-level agreements have no time limit, and there is no scheduled contract renegotiation process. There is a continuous process of discussion in the Comité, which usually meets every month. The tactics of discussion involve the companies trying to explain why they cannot increase benefits for economic reasons, while unions say they may strike or invoke motivational reasons for such increases. The fact of increased EEC competition is an often used management argument. Unions and the Comité usually do not try to understand economic situations; however, they are more and more conscious that resources are not unlimited. Many committees actually run smoothly, but in large companies, unions feel they must prove their power, and the meetings can be difficult. There is an impass when a point survives a number of consecutive Comité meetings. Unions quickly order strikes. Mediations are not really common, except in industries where economic situations make it impossible to follow the law, providing automatic wage and benefit increases, thus leading to impasses. In fact, the "contract" normally builds up with all those automatic monthly increases. In summary, what occurs in France is a build-up of various new conditions on the whole pile of past agreements. It is not possible to go backwards, yet nobody seems to be able to develop a consensus towards what the future should be. Because the core part provided by the collective agreement is usually viewed as complete, the general French attitude does not concern itself with the need for additional benefits or protection. Also, because anything given now is being

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granted for an unlimited time, companies do not go beyond the basic expectations of employees in order not to be struck with the costs later.

Current Trends Current Attitudes The most obvious and striking trend in France today is the decline of unions which is a phenomena affecting labor relations almost on a worldwide basis. We could have imagined that the advent of the Socialists' political power would strengthen the unions due to historical ties between the two entities. On the contrary, under the ten years of Mitterand, unions have considerably declined. According to a survey published in February 1990 by Sofres (a survey group), the rate of unionization has diminished by half between 1981 and 1989. Referring to Pierre Rosanvallon (1988:15), a union expert, the four main unions (CGT, FO, CFDT, and FEN) totaled 1,600,000 members only in 1988, meaning less than one worker out of ten. What are the principal reasons for this decline? The first one involves the economic crisis: by suppressing thousands of jobs, the crisis has deprived unions of an important source of members or potential members. Precariousness of jobs is another element: it is difficult for unions to recruit when employees are temporary or under a time-determined contract. The rise of individualism in the French society has also substantially contributed to the downturn trend of unions. Individuals tend to rely on their own resources rather than on organizations. Finally, the reign of the Socialists has some responsibility: when you are given retirement at the age of 60 or given a 39-hour work week, you do not have to fight to obtain these. Facing all these changes, the unions have not managed to adapt themselves. Yet the government is involved in a very recent movement for a more social economy, now that the major equilibriums and competitive factors are good. Implemented in the beginning months of 1991, the Contribution Sociale Generalisée, or Social General Participation, substitutes a tax on all incomes of individuals (including capital revenues) for the former tax on salaries in order to finance social servicee. This is an enormous project that is expected to refocus the social attention on to low-income people, include the elderly in the social financing, and reevaluate pay vis-à-vis capital incomes. The appointment of Edith Cresson as Prime Minister in May 1991, as a sign for a larger involvement of more Socialist, Mitterand-sponsored ideas, may speed this process, which should not have large effects on companies. Actually, what may be the most important lesson from this very recent move is that the government does not

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expect changes and costs to be born alone by companies, but also by individuals themselves. However, macro-economic trends and the slowdown of worldwide growth will definitely affect France. According to a survey, growth in France should not exceed 1.5 percent in 1991, half of what was budgeted before the Gulf War. The budget deficit could reach 110 or 120 billion francs which is preoccupying for the French government which wants the franc to become a currency as strong as the German mark. 1992 should be a very rigorous year by stabilizing public expenditures and by laying off thousands of civil-servants. For the moment, no tax increases are planned in order to avoid inflationary pressures.

What the E.E.C. Will Bring It is still unclear how the Free Market will affect labor-relations in France. It is however very obvious that there will be major effects. In terms of structure, the current three "actors" (government, unions, and companies) may have to incorporate two more players: the E.E.C, administration, and multi-national enterprises (MNEs). The E.E.C, is attempting to organize all local systems on one single E.E.C, model, on a compatibility basis. To take a computer analogy, application software may still be different, but all run perfectly together on the same DOS. This may include more space for German-type labor-management cooperation, or weaken the complex "Cadre" system. This also may cause problems for the industry-based collective agreement system, which does not include other E.E.C, competitors in the deal, therefore weakening the very central principle of competitive equilibrium. Actually these agreements may be judged unfair by other E.E.C, countries which favor the highest possible degree of competitiveness within all industries. One should not draw from this chapter a too scary picture of French industrial relations. Forces are exogenous, but the system runs properly, and companies actually enjoy a pleasant environment. The major social problem is sky-high unemployment, but it seems to have minimal effects on companies themselves. In recent years France has grown to be one of the best places to do business in Europe.

Notes [ 1 ] The authors would like to acknowledge the assistence of David Rueff and Joanne Bissada in the preparation of this chapter.

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Bibliography Masurel, E. (1988) L'Année 1987 dans Le Monde. Paris: Editons Folio. Landier, H. (1982) Les Organisations Syndicales en France. Paris: Entreprise Moderne d'Edition. Mitai, C. (1991) Cherchez le Programme!. Paris: L'Obs Economie. Mouriaux, R. (1986) Le Syndicalisme face à la Crise. Paris: Editions La Découverte. Reynaud, J.-D. (1975) Les Syndicats en France, Tome 2. Paris: Editions du Seuil. Rosanvallon, P. (1988) La Question Syndicale. Paris: Hachette, Ed. Pluriel. Social Pratique (1990) Memo Social 1990. Paris: Liaisons Sociales.

The Federal Republic of Germany Wolfgang Streeck

The West German system of industrial relations has survived the 1970s and 1980s without critical discontinuities. Institutional structures have proved remarkably resilient in the face of new economic conditions and such change as there was in the densely organized German system proceeded slowly against a background of general stability. Although there were episodes of intensive conflict, the basic societal and industrial consensus, and the characteristic German industrial relations pattern of "cooperative conflict resolution" (Jacobs et al., 1978), have remained intact. Arguably, this may have been because the decline in economic performance was less severe in Germany than elsewhere. On the other hand, economic performance may in itself be affected by institutional conditions, and it has been suggested that "the West German brand of industrial relations and trade unionism" can be assigned "a share of the credit" for the comparative strength of the country's economy (Flanagan et al., 1983:296).

The Structure and Condition of the West German Economy Despite its relatively small population, West Germany continues to be the world's largest exporter of manufactured goods, leading both Japan and the United States. About one-third of the production of German manufacturing industry is exported, with the export ratios of core sectors like chemicals, machine tools, and automobiles exceeding 60 percent. Among the larger economies, West Germany is more than any other exposed to world market pressures. It is only against this background that the high degree of stability and cooperation in West German industrial relations can be understood. The strong world market position of the West German economy is not based on low labor costs. The competitive advantages of West German manufacturing industry typically derive from high product quality, customized design, high reliability, and efficient repair and maintenance services. Moreover, the product range of German industry is highly diversified, and big companies can draw for specialized supplies on a large number of flexible and technically advanced small and medium-sized firms. Also, research and development expenditure is high, and this combines with the traditional long-term profit orientation of

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German capital which is supported by the banking system (Cox and Kriegbaum, 1980). West Germany's status as a major manufacturing country is reflected in the structure of its workforce. In 1985, 41 percent of the gainfully employed population were engaged in manufacturing. Although this was less than at the beginning of the 1970s, the level of industrialization continues to be higher than in any other large country, and "de-industrialization" has proceeded more slowly than elsewhere. While the service sector has increased in importance, the prosperity of the West German economy continues to depend on the performance and competitive strength of its manufacturing industries.

Changing Patterns of Employment The rise of unemployment in West Germany during the 1970s and 1980s coincided with major changes in the functioning of labor markets and the pattern of employment. In part, these were connected with industrial relations. Overall labor force participation declined steadily in the 1970s and 1980s, from 69.4 percent in 1970 to 65 percent in 1985 (OECD Labor Force Statistics, 1986). The fact that unemployment increased steeply in spite of declining participation is indicative of the dimension of West Germany's employment problems. By the end-1980s, the potential for further early retirement or educational expansion is exhausted. The same seems to be true for two other developments which have in the past helped relieve unemployment, the decline in the number of foreign workers, and the reduction of working hours. The incidence and distribution of part-time work has, by comparison, been stable. Whereas in 1976, 11.7 percent of wage earners were part-timers, in 1984 their share had grown only to 13.6 percent. About 90 percent of the present part-time workforce are women, which compares with about 85 percent in the early 1970s (Buechtemann and Schupp, 1986:42). Part of the expansion of female participation can thus be attributed to increased opportunities for part-time work, although this effect has been stronger in other countries. Full-time employment has remained the rule in West Germany, more so than elsewhere. It is difficult to say to what extent this is explained by trade union resistance to part-time work. West German trade unions regard part-time employment with suspicion, arguing that it is used "as a rationalization instrument with negative consequences for the quality and quantity of full time jobs"; that it perpetuates discrimination against women; and that it preempts the unions' demand for a general reduction of working hours (WSI, 1984, my translation). With rising unemployment, especially in the 1980s, tendencies towards labor market segmentation and dualization began to emerge. In 1981, 0.8 percent of the labor force had been unemployed for one year or longer. In the following

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year this group increased to 1.6 percent and has been rising ever since. By 1985, this amounted to about 660,000 people who were on the brink of being permanently excluded from the labor market. The problem is exacerbated by the fact that the external labor market in Germany is less flexible than in comparable countries, which in part reflects strong employment protection and the growing role of internal labor markets. Thus, the average length of employment in West Germany historically is second only to Japan (OECD, 1986b:47), and adjustment of employment to changes in output takes longer than anywhere else except, again, in Japan (OECD, 1986a:21). The emergence of internal labor markets with strong employment guarantees may have been advanced by co-determination (see below) and is in this sense a result of trade union strength. But as the "social closure" of the employment system proceeds (Hohn, 1983; Hohn and Windolf, 1985), trade unions are faced with the dilemma that what has served the interests of some of their members well may clash with the interests of other members or, more likely, of an increasingly unorganized marginal labor force.

The Role of Trade Unions and Employers Associations Workers and employers in West Germany are represented by comparatively centralized and encompassing organizations. After the Second World War, the traditional political divisions of German trade unionism gave way to joint organization of Social-Democratic, Communist, Christian, and Liberal currents in the Deutscher Gewerkschaftsbund (DGB, German Trade Union Federation). Today the DGB consists of 17 industrial unions which organize blue and white collar workers (Arbeiter and Angestellte) as well as civil servants (Beamte) and which together cover the entire economy including the public sector and the civil service. DGB-affiliated unions face competition by two other trade union centers, the Deutsche Angestellten-Gewerkschaft (DAG, German Staff Union) which organizes only white collar workers, and the Deutscher Beamtenbund (DBB, German Association of Civil Servants) which in principle represents exclusively tenured civil servants. In both categories, however, the industrial unions of the DGB together have clearly more members than their competitors. Employers are organized at the national level in the Bundesvereinigung Deutscher Arbeitgeberverbände (BDA, Federal Association of German Employers Associations) which is a federation of 47 different industrial-sector employers associations (Bunn, 1984). The BDA specializes as an employers association and divides responsibility for the representation of business interests with a number of trade associations such as the Bundesvereinigung der Deutschen Industrie (BDI, Federal Association of German Industry). Due to the almost complete organization of the large number of small and medium-sized firms -

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whose employers association is affiliated to the BDA (Streeck, 1986) - the BDA represents between 80 and 90 percent of private employers. It does not, however, comprise the public employers, which conduct their industrial relations through a separate employers association. West German employers associations have always been strong organizations. In the 1970s they built up a centrally coordinated system of strike insurance funds to support firms or sectors singled out by the unions for selective strikes or breakthrough settlements. In addition, they have shown at various occasions that they are able to impose effective lock-outs. At the same time, the BDA has always emphasized that it is in principle committed to the present system of centralized collective bargaining. In fact, a number of legislative attempts in the early 1980s to weaken the unions were opposed by the BDA and its most powerful affiliate, the employers association of the metalworking industry, Gesamtmetall. While the BDA has joined the call for more "flexibility" - not least because of the growing difficulties of many of its affiliates in securing acceptance for industrial agreements from members facing increasingly divergent regional and sectoral, as well as technical and economic conditions - it would like to see this negotiated through the existing machinery, rather than unilaterally imposed by law. Accordingly, the BDA has been criticized for lack of initiative and imagination by separate organizations of smaller firms, such as the Working Group of Independent Entrepreneurs (ASU, Arbeitsgemeinschaft Selbständiger Unternehmer) who would prefer a tougher stand being taken against trade unions. Trade union membership has remained remarkably unaffected by the economic crises of the 1970s and 1980s. Combined membership of the three centers is clearly above the level of the mid-1970s. Union membership among the employed workforce was 38.8 percent in 1987 compared to 36.5 percent in 1973. For the total workforce including the unemployed - which is considerably larger in the late 1980s than in the early 1970s, density is now only slightly lower than in the mid-1970s. Moreover, the relative strength of the three centers has remained unchanged, with the industrial unions affiliated to the DGB still representing about 86 percent of all trade union members. This is in stark contrast to the tendencies towards organizational fragmentation and dispersion that can be observed in other countries, for example in Sweden. Nevertheless, there has for several years now been a gradual decline in aggregate density, by 1.3 percent since 1983 among the employed workforce, and by 2.5 percent since 1979 among the total workforce. The effect is clearly more due to workforce expansion than to membership losses. However, if the trend continues it may at some point begin to impair the unions' public standing and legitimacy. Part of the stability of West German trade unionism is explained by the stability of the country's industrial structure, in particular the continuing strength of its manufacturing sector. In 1986, 67 percent of the members of DGB unions were still blue-collar workers, 69 percent worked in the private sector,

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and 48 percent were employed in industries exposed to world market competition. The respective figures for 1975 were 73, 71, and 47 percent.' The essentially unchanged composition of the leading trade union center with respect to membership and member interests has spared union leaders the need to consider major policy changes. It has also ensured that the interests of the export-intensive manufacturing sectors, mainly represented by IG Metall, continue to take first place in the formulation of trade union policy. The organizational robustness of West German trade unions clearly reflects the fact that the economic crisis was less severe in West Germany than elsewhere. But it is additionally related to trade union gains in institutionalization at the workplace in the 1970s, mainly through the legal extension of co-determination which enabled unions to make more extensive use of check-off arrangements and various forms of quasi-obligatory membership. In addition there was, beginning in the late 1960s, a wave of organizational change in German trade unions, involving in particular a rationalization of administrative procedures which had previously been responsible for high membership turnover (Streeck, 1982). West German trade unions, in particular the DGB and its affiliates, are well-financed and well-staffed. In the late 1960s and early 1970s, subscriptions paid by members of DGB affiliates were raised to an effective 1 percent of wages before taxes. Since then, they have remained at this level. The long and expensive strike in 1984 for shorter working hours (see below) demonstrated that the financial reserves of the union movement were still considerable in spite of the economic crisis. Subsequent legislation to withhold unemployment benefits from certain categories of workers indirectly affected by a strike ("Section 116", see below) must be seen as an attempt of the conservative government to curtail what was seen by the employers as excessive financial power of the unions. While trade union income from subscriptions continues to be high and steady, the once large industrial empire of the West German union movement is presently being dissolved. In the mid-1980s, the unions' giant housing concern, Neue Heimat, was on the verge of bankruptcy. What was worse, various instances of corruption were disclosed in the firm which badly tarnished the unions' reputations. The government, in the aftermath of the 1984 strike and during the run-up to the general election of January, 1987, refused to assist the unions in the reorganization of Neue Heimat, and the unions had to cover part of the concern's giant deficit out of their coffers. After the election, Neue Heimat was refinanced to be divided up and sold off to local communities and Länder. To raise the necessary cash, the unions had to sell other firms as well, in particular their bank, BfG, which had once been the fourth largest private bank in the country, and a large union-owned insurance company. By the end of this operation, West German trade unions will have ceased to be owners of major business enterprises.

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The Role of the State: Facilitation of Industrial Self-government and Cooperation The State and the law have always played a strong part in German industrial relations. But to an important extent legal intervention is not direct but is designed to strengthen the role and the organization of the "social partners" and delegate responsibility to them for autonomous industrial self-government (iSelbstverwaltung, Tarifautonomie). This has resulted in a "neo-corporatist" pattern of both trade unions and employers associations occupying, in a variety of ways, a quasi-public status under which they exercise legally backed rule-making authority. Industrial self-government is vested in a number of legally structured institutional settings, the most important of which are: 1) The Labor Court System. Employment disputes and disputes over collective agreements are adjudicated by a three-tiered system of Labor Courts (Blankenburg and Rogowski, 1986). A Labor Court is presided over by a professional judge specializing in labor law; its other two members are representatives of trade unions and employers associations. Labor Courts have jurisdiction over "individual labor law" pertaining to the individual employment contract, as well as over "collective labor law" regulating co-determination, collective bargaining, and the rights and obligations of trade unions and employers associations, including strikes and lock-outs. In the latter respect, the Federal Labor Court has become an important source of case law where the Bundestag has abstained from politically sensitive legislative intervention. (Reflecting the characteristic limitation of the role of the law and the State in West German industrial relations to the facilitation of industrial self-governance, there is no Trade Union Act or Strike Act in West Germany, and arbitration procedures where they exist are regulated by collective agreement.) 2) The System of Collective Bargaining. Collective agreements in West Germany are negotiated at the industry level, either nationwide or regionally (Streeck, 1984a). Regional negotiations are however closely coordinated by the national executives of the respective trade unions and employers associations, and variations between their results are small. On the trade union side, collective bargaining is dominated if not monopolized by the industrial unions of the DGB, and in fact by only a few of them. Whereas the number of formally separate agreements is high, the vast majority follows the pattern set by a few key, or "pilot," agreements, and although sectoral bargaining is not formally coordinated at the national level, inter-industry wage differentials are very low (Marsden, 1981:41). In part, this is because some DGB affiliates are too small to pursue an independent policy. 2 The same applies to the DAG whose bargaining activities in most sectors consist essentially of putting, at the invitation of the employers, its signature to the DGB agreements. The DBB, and those public sector DGB unions that

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represent only Beamte cannot formally bargain at all; legally, pay and working conditions of Beamte are unilaterally determined by the State, but in practice they follow the master agreement for the public sector which is negotiated by the respective DGB union, the ÖTV (Keller, 1978). West German industrial agreements regulate in great detail a wide range of issues in addition to wages, including employment security, training and retraining, work organization, and the rights and obligations of trade unions and employers associations (Streeck, 1981). Agreements are legally binding on the signatories and their members; in addition, they can at the request of both parties be declared binding by government decree on all firms in an industry regardless of membership in the employers association. In effect, this makes for almost complete coverage, in spite of the relatively low density level of about 40 percent. It is important to emphasize that there has never been a statutory incomes policy in West Germany, and it is doubtful whether direct State intervention of this kind would be constitutional. 3) The System of Co-determination. Co-determination is the "peculiar institution" of West German industrial relations (Adams and Rummel, 1977; Bundesminister für Arbeit und Sozialordnung, 1978; Streeck, 1984b). Employees in West Germany are represented, under the Works Constitution Act of 1972, by works councils which are elected every three years. All workers in a given establishment are entitled to vote and stand for election, regardless of union membership. However, about 80 percent of works councillors are elected from among candidates put up by the DGB trade union organizing the respective industry, and the works council has in effect become the organizational center of industrial unions at the workplace. Works councils have legal rights to consultation and co-decision-making on a range of specified matters, and in large firms their factual strength often exceeds their legal powers. Works councils are also legally charged with supervising the implementation of industrial agreements, and they are barred from negotiating on subjects that are settled by industrial agreements - in particular, wages. In the 480 largest companies which account for about 27 percent of the national workforce and 48 percent of the total output, workers and trade unions also hold one-half of the seats on the supervisory board. 3 However, in the case of a split vote, the chairman who always comes from the shareholders' side has a casting vote. (Of course, the vast majority of the decisions on German supervisory boards are taken unanimously.) Works councils are not permitted to call a strike but have to take recourse to mediation, arbitration, and adjudication. 4) The System of Vocational Training. West Germany has a comprehensive vocational training system, important parts of which are jointly managed by employers associations, trade unions, and the government (Streeck et al., 1987). Trade unions are in particular involved in the establishment of training profiles and curricula for the 420 recognized occupations throughout the economy. The vocational training system is one of the most important sources of the West

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German "industrial consensus". The strong support of both trade unions and employers for training and retraining reflects the dependence of the West German economy on world markets for quality rather than price-competitive products, and the corresponding need for a highly skilled and reliable workforce. 5) The Labor Administration (Bundesanstalt für Arbeit, ΒΑ), which has a legal monopoly on labor exchange services, administers unemployment insurance, and oversees and finances active labor market policies such as retraining and further training programs. Trade unions, employers associations, and the State (represented by the three levels of government) each hold one-third of the seats on the BA's national decision-making bodies. Cooperation and conflict resolution in and through established institutional settings, with the State acting as a "banker of last resort" providing for stable terms of political exchange and ensuring the participants' mutual trust, has made for a specific form of industrial order which seems to fit well with the German pattern of "diversified quality production" for non-price-competitive world markets (Sorge and Streeck, 1988). West German firms have little difficulty getting their workforces to accept technical change, and comparative studies have shown German workplaces to be highly flexible in this respect (Hotz-Hart, 1988; Jacobs et al., 1978; Sorge and Warner, 1980). In part, the low resistance of workers to change is accounted for by the co-determination system which provides for legally guaranteed comprehensive interest representation at the establishment and enterprise level. While this places the articulation of sectional interests at a disadvantage and promotes the identification of workplace representatives with the economic well-being of the enterprise, it also gives workforces effective means to protect themselves from negative effects of technical change. Board-level co-determination has in addition strengthened the manpower management function in large firms, which together with the extended rights of works councils to co-determination on recruitment, dismissals, retraining, and redeployment has promoted a more circumspect and long-term manpower and human resource policy (Hoff, 1984). This has enabled firms to make up through internal adjustment for strong and increasing employment rigidities. The result is a pattern of sometimes considerable rigidities in the external labor market going together with high flexibility of internal labor markets and the organization of work - which is in strong contrast to the Anglo-Saxon pattern of external flexibility and internal rigidity (Marsden, 1981:18). High employment security in internal labor markets enables works councils and trade unions to continue to support technical change and organizational flexibility. Instead of demarcating job territories and imposing restrictive practices, West German industrial agreements on "protection against rationalization" provide for wage maintenance for workers allocated to a new job in the course of technical change; employment protection, especially for older workers; requirements for employers to offer displaced workers alternative jobs upon

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retraining; new payment systems which emphasize knowledge and ability rather than jobs actually performed, etc. Internal flexibility is further facilitated by the skill structure generated by the vocational training system. German firms use more skilled workers than their foreign competitors and this accounts in part for their less "Taylorist" work organization (Maurice et al., 1980).4 Works councils have considerable influence on training and further training programs, and they have always used this to press for extended training efforts. Thus, in the 1970s, the number of apprentices in the German manufacturing sector increased strongly even in years when total employment declined. The resulting supply of broadly based high skills constitutes a major asset for industrial restructuring and is a stabilizing factor for the "productivity coalition" between management and labor at the workplace. While there were strong tensions between the unions and the conservative government that took power in 1982, there was no all-out confrontation along British lines. Fundamentalists in the government and employers camps have more often than not pressed for "deregulation" of the labor market, limitations on the right to strike, retrenchment of co-determination, etc. But apart from a few isolated and limited measures like legislation to reduce employment protection on the margins of the labor market (Beschäftigungsförderungsgesetz), not much has happened. This is accounted for in part by the surprising weakness of the government after its 1987 re-election; by the strong centrist tradition of West German politics; by the still formidable organizational muscle of the trade union movement as demonstrated in 1984; and by the sheer complexity of the institutional system which tends to make any single change either ineffectual or extremely unpredictable in its outcome. But it is also due to the fact that the system has on the whole performed well economically, with industry-wide wage bargaining having held product wages constant since 1982 in spite of shortages in major labor market segments. It is true that in the 1980s, the unions see the Chancellor much less frequently than under the previous government, and their presence in more informal decision-making arenas - like the management of declining sectors (Strath, 1986) - has diminished. But in the legally institutionalized settings of "cooperative conflict resolution," trade unions are as safely established as ever, and there is no reason to expect that the present government, or indeed any other, will tamper with the labor court system, centralized collective bargaining, co-determination at the workplace and enterprise level, the vocational training system, or the self-government of active labor market policy.

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Patterns of Industrial Conflict The West German pattern of strikes and lock-outs is a direct reflection of the centralization of collective bargaining and of the strong role of trade unions and employers associations at the industry level. Strikes can be called only by the national executives of industrial unions, and they are legal only after an industrial agreement has expired. As a consequence, strikes are rare and working days lost are negligible in most years. But about every five years, there is one major conflict, always in the metalworking sector and frequently accompanied by a parallel dispute in the printing industry. (As the private, export-oriented sectors of the economy continue to dominate trade union policy, public sector strikes are infrequent.) These conflicts last long and involve a large number of workers. Throughout the 1970s and 1980s, the big strikes were not primarily over wages but over employment protection, working conditions, and working hours. Typically, about one-half of the affected workers are not called out by the union but are locked out by the employers. The settlement that results from such disputes is in ensuing years gradually diffused throughout the economy, including the public sector. Strike strategies of trade unions and employers associations are to a large degree determined by financial considerations. DGB unions pay their members strike benefits amounting to about two-thirds of take-home pay; that is roughly equivalent to the rate of public unemployment benefit. Since strikes can legally be called only in pursuit of an industry-wide agreement, the number of workers that may have to be supported is always high. As a consequence, unions have to accumulate funds for a number of consecutive years before they go on a major strike. Even so, a union like IG Metall with 2.6 million members (1987) cannot afford to call out its entire membership. The high art of West German strike tactics is to concentrate on a limited number of establishments selected for maximum impact (referred to as the "minimax strategy")· For this reason as well as others, IG Metall holds on to the tradition of negotiating formally separate regional agreements, which makes it possible to limit a strike to one "pilot area". To get uniform conditions for the entire country, the union depends in effect on the ability of the national employers association to make its other regional affiliates sign identical agreements. This has, with a few exceptions, always been achieved, although it has sometimes created considerable tensions inside Gesamtmetall and once even led to a (short-lived) secession of several regional affiliates. Even within the pilot region, IG Metall normally strikes only at a few selected firms. To enable employers associations to distribute the burden of a conflict more equally among their members - without which they would find it difficult to win a majority for a settlement which inevitably involves concessions - it is legal for them to impose a "retaliatory lock-out" in a bargaining district where

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the union has gone on selective strike. The number of workers that are locked out must be "in proportion" to the number of workers on strike. Since trade unions pay locked out members strike benefits, the lock-out is essentially a device to increase the costs of the strike for the union and drain its funds. In the 1984 strike for reduction of working hours, IG Metall used a new variant of the "minimax strategy" which employers found particularly menacing. While the strike was initially limited to one region, Nord-Württemberg/ Nord-Baden, the firms that were selected were crucial suppliers to the car industry. Due to reduced ("kanban"-type) stock-keeping, this resulted in an almost immediate shutdown of this industry in the entire country, including in regions where the union had not yet struck. Here, the employers were legally barred from locking out in retaliation whereas the laid-off workers were entitled to unemployment benefits. For the employers, the calculated use of this effect by the union amounted to an attempt to turn the social insurance system into a "second strike fund". 5 This gave rise to legislation by the conservative government (the so-called "Section 116" bill) to exclude workers from unemployment benefits if they were laid off for lack of work during a strike, and if this strike was for demands that were at the same time also being raised on their behalf. The bill was passed one year before the 1987 election in an atmosphere of intense political confrontation, with the unions accusing the government of attacking the constitutional right to collective bargaining and some of their leaders drawing comparisons to 1933 when the Nazis destroyed the trade union movement. The impact of the new law is not yet clear. One possible effect could be a more dispersed pattern of industrial conflict, with negative consequences for the comprehensiveness of the collective bargaining system and the organizational cohesion of employers associations (Weber, 1986). This would be likely to undermine the practice of pilot agreements, at the expense of the governability of the collective bargaining system which has been so economically beneficial in the 1960s and 1970s (Flanagan et al., 1983) as well as thereafter. On the other hand, in early 1987 IG Metall was able to win a further reduction of working time at full compensation of pay, to 36.5 hours by 1990. Although it had been widely predicted during the negotiations that either the employers would test the impact of the Section 116 legislation and go for a lock-out, or the union would seek a strike to show that its power and resolve were unbroken, the settlement was reached by negotiation, without even a need for mediation or arbitration.

The Collective Bargaining System in Transition Central features of the West German system of collective bargaining have remained in place - in particular, the practice of interconnected industry-wide

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agreements and the "strike monopoly" of industrial unions, making for relatively low wage drift and low wage differentials between firms, industries, and regions. But there have also been significant changes. Since these have proceeded gradually and along the lines of evolutionary tendencies that have been present for at least two decades, they are not always obvious. In effect they add up to a cumulative transformation of the system, in the course of which the center of gravity of joint regulation is shifting from the industrial to the establishment and enterprise level where workers are represented not directly by trade unions but by elected works councils. One long-term tendency with structural implications is the declining significance of wage bargaining. By the mid-1970s at the latest, West German trade unions had given up whatever "money illusion" they may once have entertained. They understood that their only realistic objective under high unemployment and a non-accommodating monetary policy was to defend existing wages against inflation. In holding nominal wage increases down and foregoing real wage increases, trade unions contributed strongly to rebuilding the profitability of the West German manufacturing sector, in the hope for higher investment to relieve unemployment. This, however, did not materialize. While trade unions in the past had used centralized bargaining successfully to protect the traditionally low wage differentials in West Germany between firms, industries, skill groups, and regions, high unemployment led to a shift in tactics. In order to increase the number of jobs, the unions began to focus on issues other than wage increases. Since wage bargaining had traditionally been one of the main components of bargaining at the sectoral level, its decline raised - as it were, by default - the relative importance of other, lower levels of joint regulation. Another development which started as far back as the early 1970s and which also contributed to the growing role of workplace joint regulation was the increasing importance of so-called "qualitative" bargaining matters (Streeck, 1981). A new concern with working conditions and work organization in the 1970s resulted in several key agreements on "humanization of working life". Later, more rapid rationalization and modernization of production systems gave rise to calls for initiatives to protect workers from the impact of technical change ("Rationalisierungsschutz", protection against rationalization). In the 1980s, increased capital intensity and new forms of work organization made employers press for new, more flexible working time regimes. In all these cases, the subjects at stake were too complicated to be regulated exclusively and uniformly at the industrial level. The solution adopted was to insert into industrial agreements clauses charging works councils and individual employers with negotiating, inside the institutions of workplace co-determination, the detailed application of general principles agreed at the industrial level. This development was seen with considerable ambiguity by the unions. However, it seems to have been so irresistible that even the 1984 and 1987 agreements on working hours

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added to the decentralization of joint regulation 6 although one of the union's objectives in 1984 had been to re-establish control at the sectoral level over increasingly divergent local working-time arrangements (Bartel and Falk, 1986; Schmidt and Trinczek, 1986). As a result, the institutional setting of co-determination has for some time been turning into a second, decentralized arena of joint regulation with what amounts to a de facto closed shop (legal representation of the entire workforce by the works council), a monopolistic bargaining agent (the works council), a prohibition on strikes (as these are limited to the industrial level), and compulsory arbitration (through, ultimately, the Labor Courts). This system corresponds closely to the growing importance of internal labor markets and the increasing complexity and diversity of technical, organizational, and economic conditions at the workplace. Its gradual emergence, which in part was of the unions' making, exerts pressure on industrial unions to review their organizational structures and bargaining strategies and redefine the role of sectoral agreements. The evolutionary trend, predating the crisis but precipitated by it, seems to be for industrial unions to turn into centers of external organizational support for, and mutual cooperation between, works councils representing workers in more and more heterogeneous and autonomous workplace bargaining units, instead of imposing general and uniform rules on entire industries. While central agreements, also on non-wage matters, are there to stay, they are likely to assume a new role, that of giving guidance to negotiators at the plant and enterprise level, charging them with regulating centrally specified subjects, circumscribing their range of discretion, and possibly offering them a set of alternative solutions among which they can, and have to, choose ("cafeteria" or "menu agreements").

Current Problems and Future Prospects Since 1974, and especially in the 1980s, German trade unions found themselves pressed to do something about unemployment. To offer their members a substitute for both wage militancy and government recipes against unemployment, and also to defend the primary of sectoral collective bargaining over the workplace, West German trade unions in the 1980s adopted various work sharing projects, in particular the reduction of working hours at full compensation of pay. In conjunction with strong employer and government resistance, this provided union activists with a new sense of direction and purpose. It also gave union leaders an opportunity to call a strike in 1984 which arguably was necessary to remind the new government that the balance of political and social power was still intact. However, a "solidaristic redistribution of work", as it is called in trade union jargon, may not reduce

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unemployment, and this "working time illusion" may actually fall apart. In 1984 and 1987, IG Metall won nationwide settlements under which, essentially, hourly wages were raised in line with the average increase in productivity, while working hours were cut so as to keep overall take-home pay before taxes roughly constant in real terms (Arbeitszeitverkürzung mit Lohnausgleich). The idea was that the hours that were thus "taken away" from employed workers would be redistributed to the unemployed as employers would proportionately increase their workforces. But due to the small margin of productivity growth limiting the volume of working time available for "redistribution"; the additional increase in productivity that accompanies any reduction of hours; the structure of unemployment which does not match that of the demand for labor in a modernizing high-skill economy; low regional mobility; and the use of working time cuts by many firms to reduce their labor input without redundancy payments, the estimated increase of employment that resulted from the celebrated 1984 breakthrough was in the order of no more than 50,000 jobs, 7 in an industry that employs roughly four million workers. Nothing better is to be expected of the 1987 agreement. Working time policy has for a while helped unions hide their bewilderment vis-à-vis persistent high unemployment in a prosperous economy. In particular, it enabled them to shift the blame for unemployment to the employers who resisted shorter hours for fear of higher costs and labor shortages in skilled submarkets. Moreover, employer and government resistance offered the unions an opportunity to define unemployment politically in the traditional language of distributional confrontation. Demands for shorter hours also responded to rising work intensity in a rapidly modernizing production system and thereby may have helped the introduction of new technology. Not least, working time policy reflected changing income-leisure preferences among certain highly visible and outspoken segments of the population, in particular the increasingly typical childless family with two wage earners, and it went down well with the feminist stream in public opinion, with IG Metall holding out a vague promise of the 30-hours week at the beginning of the next century creating the conditions for "full equality between men and women". Finally, it played to some of the post-industrial sentiment organized in the Green party but extending well into the new mainstream of Social Democracy, for which a reduction of unemployment through economic growth instead of redistribution appears unacceptable because of its expected negative consequences for the environment and the "quality of life". However, as the minuscule effects of the 1984 and 1987 agreements are becoming more difficult to hide, the usefulness of working time policy as symbolic politics is bound to wear down. Indeed, having themselves actively endorsed the now widely accepted definition of unemployment as a problem of redistribution and solidarity between workers "inside" and "outside" employment, trade unions in early 1988 found themselves exposed to mounting public

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demands to be consistent and agree to working time cuts exceeding productivity increases - cuts, in other words, that would result in lower incomes for their employed members. By the late 1980s, West German trade unions had maneuvered themselves into an increasingly uncomfortable political corner where their opponents had little difficulty in picturing them, in a phrase coined by Ralf Dahrendorf, as a "special interest organization of a declining social group". Like their counterparts in other countries, West German trade unions are rapidly running out of political devices, such as working time policy, to avoid addressing the fundamental problem of trade unionism in a post-industrial economy. To protect their organizational stability and political power, trade unions in the 1990s will have to identify new fields of activity in addition to and as a substitute for wage bargaining, where they can play a part as agents of egalitarian redistribution while at the same time contributing to the development of the society's productive forces. Exclusively redistributive trade unionism that merely imposes an "equity tax" on the economy runs the risk of being pushed aside, under today's changea market and social conditions, not just by employers and hostile governments but also, and most importantly, by a significant part of the changing workforce. If working time policy cannot take the place of wage bargaining, what can? While German trade unions seem to have advanced further than most other union movements in assembling the building blocks of a strategy, they have done so quite unsystematically, often unknowingly, and always with a bad conscience - frequently leaving novel initiatives to the works councils under co-determination and sometimes accusing them later of class collaboration, or Betriebsegoismus, to appease the militants. Certainly, West German trade unions do not see their contribution to economic adjustment and full employment to be give-backs on employment security, wage stickiness, or the creation of wage differentials, and together with the works councils they will continue to defend their concept of work and employment as a full-time, long-term, skilled occupation. This places close limits on their potential acceptance of external labor market flexibility, even if unemployment could be considerably reduced by a higher wage spread between sectors, regions, and, in particular, skill levels. Trade unions fear that such flexibility would erode the quality of the employment system as a whole, setting in motion a general "cheapening" of working conditions that in the long-run would undermine core elements of West German economic competitiveness, such as high skills and high work motivation, and thereby would be likely on balance to reduce rather than increase employment opportunities. In fact, if they were willing to use this language, German unions could well argue that high and equal wages and high employment security have in the past offered a vital incentive to employers to train and retrain workforces and draw on high skills for advanced production strategies that have lifted

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German manufacturing into relatively secure, quality-competitive, and, not least, highly profitable markets (Streeck, 1987). Rather than accepting a lower price of labor to clear the labor market, West German unions and works councils have, under the cover of their symbolic politics of working time reduction, embarked on a variety of strategies to raise the quality and productivity of labor so as to justify ex post, as it were, its present, downwardly rigid, "excessive" price. This response to unemployment is not easy to present publicly since it does not promise a fast and simple solution. Moreover, its logic runs counter to traditional trade union ideology which has always rejected the notion that a worker's wage cannot, in the long-run, exceed his or her marginal productivity. But while strategic thinking among German trade unions on their future role moves extremely slowly, actual behavior clearly revolves around the idea of increased investment in, and better utilization of, human capital resources, in an effort to rebuild and defend the competitiveness and long-term profitability of the West German economy. Important developments have recently taken place in this respect, but just as with wage restraints, unions have been reluctant to advertise them. In a few years, however, the various steps that have been taken or are under way may add up to a more or less coherent trade union strategy, centering around modernization and upgrading of skills and production patterns, which is partly imposed on employers and partly pursued in cooperation with them. The following examples may serve as illustrations: • Shortly after the 1984 strike, IG Metall and the employers association of the metal industry, Gesamtmetall, ended ten years of intense negotiations and joint research on an overhaul of the training scheme for the skilled metal occupations. The length of the average apprenticeship was extended to three-and-a-half years; the number of occupations was reduced to eighteen to make curricula broaderbased and less specialized; extensive training in micro-electronic technology was included in all curricula; and training standards were (further) raised. Remarkably, both sides were willing and able to protect their joint reform project over an entire decade against the repercussions of an increasingly tense industrial relations climate in the 1970s and 1980s, and even the 1984 conflict was not allowed to interfere with the completion of the extremely complicated negotiations. 8 • In 1986, employers associations, trade unions, and the government agreed to use the growing surplus in the budget of the Bundesanstalt für Arbeit, not to reduce contributions to unemployment insurance, but to finance a nationwide "qualification offensive" to update the skills of both employed and unemployed workers. • The automobile section of IG Metall has for some time been offering employers use of further reductions in working hours not for additional time off, but for training at the workplace with the aim of improving product quality and competitiveness. A reduction of one hour per week at full compensation of pay

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would, for example, make it possible for each worker to attend one four-hour training course per month. Training hours could also be used for quality circle-like discussion of production matters at the workplace within work groups. • Trade unions are beginning to accept the idea that quality circles, properly applied, are not necessarily management tools to undermine trade unions or co-determination. The powerful works council of VW, which normally sets the pace and determines the direction for trade union workplace initiatives, has recently signed an agreement with management on so-called "VW circles", conceived as means of improving product quality, cut costs, and upgrade the skill base of the workforce. The works council is closely involved in controlling and monitoring circle activities. Indications are that many other firms will soon follow. • The chemical workers union, IG Chemie, has in 1987 successfully concluded long negotiations on a new framework agreement that is likely to fundamentally change the face of the German employment system. The agreement, called Entgelttarifvertrag, eliminates the century-old distinction between blue- and white-collar workers for the entire chemical industry (a distinction, by the way, that has always been unknown in Japan). In coming years, payment systems and job descriptions will be completely revised so that all employees are paid by identical criteria of skill, responsibility, and effort. The integration of formerly separate pay scales and the merger of previously categorically different status definitions will both accommodate and facilitate ongoing changes in the organization of work, in particular in the relationship between direct and indirect labor and between conception and execution. Incidentally, the agreement will also protect the organizational basis of IG Chemie as an industrial union against the possibility of highly skilled manual workers that achieve white-collar status leaving the union for a competing white-collar organization. Other unions will undoubtedly follow soon (see below), and it seems that West Germany will be the first Western country where industrial modernization will do away with the traditional distinction between blue- and white-collar workers. • Both agreements on working time reduction in the metal industry contained trade union concessions on flexibility. As pointers to future developments, these were probably more important than the hours reduction as such. Being forced under the agreements to experiment with flexibility, trade unions and works councils are likely to become more confident in handling custom-made working time regimes specifically designed for individual plants and enterprises. While unions still engage in conflictual rhetoric on Saturday working or on "unmanned" night shifts, the high capital intensity of modern factories and the need to better utilize the high skills of modern workforces will soon overcome their resistance, very much like in the case of the quality circles.

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• In early 1988, IG Metall signed a framework agreement in its "pilot district," Nord-Württemberg/Nord-Baden, which is of no less historical importance than the Entgelttarifvertrag of IG Chemie or the reform of the metal industry training scheme. The event went almost unnoticed as the agreement was negotiated in complete consensus. The agreement, which redefines and homogenizes the criteria of wage determination for blue- and white-collar workers, contains - according to a report in the pro-business Frankfurter Allgemeine Zeitung (FAZ, February 13, 1988) regulations on the maintenance and extension of the employees' qualifications. Under these, employer and works council are to determine jointly the skilling needs of the enterprise and the skilling interests of the workforce, and if possible bring the two in agreement. Incentives for further training are created in that employees who undergo training are guaranteed upgrading and higher pay. [ . . . ] From the perspective of the parties which interpret the agreement in rare unanimity, this will facilitate the adjustment of enterprises to growing work satisfaction and thus contribute to a better working climate. Already during the planning of physical investment and parallel to it, enterprises can now consider the further training needs of workers affected by technical change. [...] With the agreement [ . . . ] the union can reject the charge that its wage policy has in the past been guided by a tendency to erode differentials. N o w employees are to seek and receive a higher income through higher qualification.

Since under the agreement, employers have to pay a worker who has acquired additional skills higher for at least eight months even if his or her enhanced skills are not used, the expectation is that employers will reorganize work in such a way that they can benefit from the human capital investment they are obliged to make under the agreement. "Employers can expect from the agreement to be placed under pressure to train, and this effect both parties (my italics, W. S.) actually intend to create" (FAZ, February 13, 1988). The agreement includes an understanding that on the basis of the anticipated extended training efforts, the two sides will move towards an Entgelttarifvertrag like in the chemical industry; formal negotiations on this began in 1991. West German industrial relations are in a state of profound transition. Developments are moving slowly, but they have begun to touch the very foundations of the post-war system of cooperative conflict resolution. Barring historical shocks by unforeseeable critical accidents, it is not likely that West Germany will follow the path of de-unionization, or will experience a period of polarized and ideological industrial conflict. While neither of these can entirely be ruled out, it is more likely that the peculiarities of West German institutional arrangements will, in adjusting to new conditions, become even more pronounced, and that industrial relations and, especially, co-determination will continue to make a potentially growing contribution to economic performance.

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Notes [1] Slightly different figures are given in Visser (1990). [2] Two-thirds of all DGB members belong to the four largest unions (Visser, 1990). [3] One of the workforce representatives on the supervisory board has to come from the ranks of middle management (leitende Angestellte). In practice, this has made less of a difference than was often feared, or hoped. In a considerable number of cases, the middle management representative cooperates closely with the other members of the "labor bank" and casts his vote with them. [4] About 60 percent of male manual workers in German manufacturing industry are skilled (Marsden, 1981:41). [5] The 1984 strike for the 35-hour week at full compensation of pay in the metal industry lasted nine weeks and was the biggest and arguably most embittered in the history of the Federal Republic. When it ended, 455,000 workers were out of work. Of these, 58,000 were on strike, 147,000 were locked out (some of them after they had gone on strike), and 250,000 were laid off due to lack of supplies. IG Metall paid about DM 500 million in strike benefits, one-third of its total reserves. An estimated DM 800 million were paid by the employers association to its members in strike and lock-out benefits, and laid off workers received DM 300 million in unemployment benefits (Roesner, 1984; Weber, 1985). [6] This was because in return for the reduction of hours, the union had to accept a number of "flexibility" provisions under which specific details of working time regimes were to be hammered out at the individual workplace level between employer and works council. [7] This is the estimate of the Bundesanstalt für Arbeit. The IG Metall claims the agreement has created 90,000 jobs whereas the employers associations concede 19,000. [8] The new curriculum, under the rules of the vocational training regime, was put into effect by the Minister of Economic Affairs and is now obligatory for all employers in the metal industry. Adherence to the new training scheme is supervised and enforced by the Chambers of Industry and Commerce and the Chambers of Artisans, respectively (Streeck et al., 1987).

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Sorge, A. and M. Warner (1980) "Manpower Training, Manufacturing Organisation and Workplace Relations in Great Britain and West Germany". British Journal of Industrial Relations, 18, 318-333. Strath, B. (1986) "Redundancy and Solidarity: Tripartite Politics and the Contraction of the West European Shipbuilding Industry". Cambridge Journal of Economics, 10, 147-163. Streeck, W. (1981) "Qualitative Demands and the Neo-Corporatist Manageability of Industrial Relations: Trade Unions and Industrial Relations in West Germany at the Beginning of the Eighties". Britain Journal of Industrial Relations, 14, 149-169. Streeck, W. (1982) "Organizational Consequences of Corporatist Cooperation in West German Labor Unions: A Case Study". In G. Lehmbruch and Ph. C. Schmitter (eds.), Patterns of Corporatist Policy-Making, 29-81. Beverly Hills and London: Sage. Streeck, W. (1984a) Industrial Relations in West Germany: A Case Study of the Car Industry. London: Heinemann; New York: St. Martin's Press. Streeck, W. (1984b) "Co-Determination: The Fourth Decade". In B. Wilpert and A. Sorge (eds.), International Perspectives of Organizational Democracy (Vol. II of the International Yearbook of Organizational Democracy), 391-422. Chichester, etc.: John Wiley and Sons. Streeck, W. (1989) "The Territorial Organization of Interests and the Logics of Associative Action: The Case of Handwerk in West Germany". In: W. D. Coleman and H. J. Jacek (eds.), Regionalism, Business Interest and Public Policy, 59-87. London and Beverly Hills: Sage. Streeck, W. (1987) "Industrial Relations and Industrial Change: The Restructuring of the World Automobile Industry in the 1970s". Economic and Industrial Democracy, 8, 437-462. Streeck, W., J. Hilbert, Κ. Η. van Kevelaar, F. Maier and Η. Weber, (1987) The Role of the Social Partners in Vocational Training and Further Training in the Federal Republic of Germany. Berlin: European Centre for the Promotion of Industrial Training (CEDEFOP). Visser, J. (1990) In Search of Inclusive Unionism: A Comparative Analysis. Bulletin of Comparative Labor Relations 18. Deventer and Boston: Kluwer. Weber, H. (1985) "Konkurrenz und Solidarität: Zur Arbeitskampfstrategie der metallindustriellen Arbeitgeber im Tarifkonflikt 1984". Bielefeld: Typescript. Weber, H. (1986) "Desynchronisation, Dezentralisierung - und Dekomposition? Die Wirkungsdynamik des Tarifkonflikts '84 und ihre Effekte auf das System industrieller Beziehungen". Arbeitsberichte und Forschungsmaterialien Nr. 19. Universität Bielefeld: Forschungsschwerpunkt "Zukunft der Arbeit". WSI (1984) Tarifvertragliche Bestimmungen zur Teilzeitarbeit. Düsseldorf: Wirtschafts - und Sozialwissenschaftliches Institut des Deutschen Gewerkschaftsbundes - Tarifarchiv.

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Additional Reading Clark, J. et al. (1980) Trade Unions, National Politics and Economic Management. London: Anglo-German Foundation for the Study of Industrial Society. Fürstenberg, F. (1984) "Recent Trends in Collective Bargaining in the Federal Republic of Germany". International Labor Review, 123, 615-630. Fürstenberg, F. (1987) "The Federal Republic of Germany". In G. J. Bamber and R. Lansbury (eds.), International and Comparative Industrial Relations: A Study of Developed Economics 165-186. London: George Allen and Unwin. Herding, R. (1972) Job Control and Union Structure: A Study on Plant-Level Industrial Conflict in the United States with a Comparative Perspective on West Germany. Esp. Chapter 4, "Job Control and Co-determination", 319-345. Rotterdam: Rotterdam University Press. Hotz, Β. (1982) "Productivity Differences and Industrial Relations Structures: Engineering Companies in the United Kingdom and the Federal Republic of Germany". Labor and Society, 7, 333-354. Jacob, O. (1985) "World Economic Changes and Industrial Relations in the Federal Republic of Germany". In H. Juris et al. (eds.), Industrial Relations in a Decade of Economic Change, 211-246. Madison, WI: IRRA. Kerr, C. (1954) "The Trade Union Movement and the Redistribution of Power in Postwar Germany". The Quarterly Journal of Economics, LXVII, 535-564. Lawrence, P. (1980) Managers and Management in West Germany. London: Croom Helm. Maitland, I. (1983) The Causes of Industrial Disorder: A Comparison of a British and a German Factory. London: Routledge and Kegan Paul. Markovits, A. S. (1986) The Politics of the West German Trade Unions. Cambridge: Cambridge University Press. Markovits, A. S. and Ch. S. Allen (1984) "Trade Unions and the Economic Crisis: The West German Case". In P. Gourevitch et al. (eds.), Unions and Economic Crisis: Britain, West Germany, and Sweden. London: George Allen and Unwin. Marsh, A. et al. (1981) Workplace Relations in the Engineering Industry in the UK and the Federal Republic of Germany. London: Anglo-German Foundation for the Study of Industrial Society. Miller, D. (1978) "Trade Union Workplace Representation in the Federal Republic of Germany: An Analysis of the Postwar Vertrauensleute Policy of the German Metalworkers' Union (1952-77)". British Journal of Industrial Relations, 16, 335-354. Müller-Jentsch, W. (1981) "Strikes and Strike Trends in West Germany, 1950-1978". Industrial Relations Journal, 12, 36-57. Schregle, J. (1978) "Co-determination in the Federal Republic of Germany: A Comparative View". International Labor Review, 117, 81-98. Schwerdtner, P. (1979) "Trade Unions in the German Economic and Social Order". Zeitschrift für die Gesamte Staatswissenschaft, 135, 455-473. Streeck, W. (1984) "Neo-Corporatist Industrial Relations and the Economic Crisis in West Germany". In J. H. Goldthorpe (ed.), Order and Conflict in Contemporary Capitalism, 291-314. Oxford: Clarendon Press.

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Streeck, W., P. Seglow and P. Wallace (1981) "Competition and Monopoly in Interest Representation: A Comparative Analysis of Trade Union Structure in the Railway Industries of Great Britain and West Germany". Organization Studies, 2, 307-329. Sturmthal, A. (1964) Workers Councils: A Study of Workplace Organization on Both Sides of the Iron Curtain. Chapter 3, "Germany", 53-85. Cambridge, MA: Harvard University Press. Weiss, M. (1987) Labor Law and Industrial Relations in the Federal Republic of Germany. Deventer and Boston: Kluwer.

Great Britain Graham Hollinshead

Introduction and Background The Institutional Framework Industrial relations in Great Britain are a product of a variety of influences, some of these being in the form of tradition, and rooted in the distant past, whilst others have derived from overseas and have been exerted primarily through the activity of the increasing number of multinational organizations now operating on British soil. As we shall see in this chapter, the last decade or so has been a time of significant change in Great Britain industrial relations, and a number of "sacred cows" have been slaughtered. Nevertheless, the basic institutional and legal framework remains intact. Trade unions first emerged during the first half of the nineteenth century at a time when working conditions were adverse for the majority of employees, and they were initially resisted by both Parliament and employers. However, after emerging in a variety of forms, ranging from small exclusive bodies of skilled workers (craft unions), to large general concerns, the union movement gradually consolidated its position and won recognition from a majority of employers and successive governments. The zenith of the movement occurred in the late 1970s, when union leadership possessed considerable potency in determining the wages and conditions of their 13.2 million members, as well as considerable influence over the will of legislators.

The Context Institutional arrangements are clearly of primary importance in establishing typical patterns of behaviour and interaction within a particular industrial relations system. However, it is important to bear in mind that they exist within a dynamic economic and political environment, and must evolve in response to changes in that environment. In Great Britain two political parties possess the vast majority of seats in the House of Commons. The Conservative Party occupies the right of the political spectrum and receives considerable funding from business, while the Labour

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Party's origins are socialist, and it is mainly funded by trade unions. The driving force behind much of the Conservative governments's economic and legal programme has been a strong belief in an enterprise culture in which individuals and organizations are held responsible for economic performance rather than government. The onset of "Thatcherism" in the 1980s signalled a move away from Keynesian economic policies and associated tripartite modes of industrial and economic management. Instead, the monetarist approach has implied a reliance on free interaction of supply and demand in all sections of the economy, including the labour market. Consequently the objective of reducing the level of unemployment has been overtaken by the need to establish "realistic" wage rates in a market environment. Consistent with this has been the view that the process of collective bargaining, and trade unions themselves, tends to hamper the effective operation of the market, which centers primarily on the individual employment relationship. The government's key instrument in the management of the economy has been the control of the money supply. Significant cuts have been made in public expenditure, and this has been accompanied by the extensive privatization of nationalized industries. In the course of this programme, large concerns such as British Telecommunications (the telephone network), British Gas, and British Airways have been transferred from State to private ownership. Within this overall picture, significant structural changes have occurred in the labour market. The feature of monetarism which has perhaps caused most concern has been the persistently high level of unemployment over the last decade. By 1987, the labour force numbered about 27.2 million, 2.5 million of whom were unemployed. With regard to the composition of employment, a restructuring of industry has been associated with some significant trends. In particular, there has been a continued decline in the primary and manufacturing sectors, with the services sector continuing to expand. Related to this has been an expansion of nonmanual occupations and a rise in female participation rates. These trends are thought to provide some explanation for changing attitudes amongst trade unionists. The ever increasing proportion of white collar workers within union ranks could have promoted a shift towards "business" unionism and a predisposition to collaborate with employers. In parallel with these trends has been a recent decline in public sector employment, which has been caused, to a large extent, by the privatization programme referred to above. Therefore, by the late 1980s, out of an estimated labour force of about 25.3 million, some 18.5 million were in the private sector, and 6.4 million were in the public sector, with the remainder being on some form of government training scheme (Social Trends, 1989:72). An important trend will be a marked reduction in the number of under-25year-olds entering the labour market in the early 1990s. The "demographic time

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Great Britain Table 1: Employment in selected industries 1982 — 1989 (thousands)

Motor vehicles Food, drink, tobacco Agriculture, fishing, etc. Textiles, leather, etc. Coal, oil, gas extraction Timber, rubber, etc. Metal manufacturing Paper products, printing and publishing Electricity, gas, water supply Construction Chemicals, etc. Wholesale distribution Retail distribution Hotels and catering Transport Post and telecommunications Banking, insurance, finance Public administration Education

%

1982 (June)

1988 (June)

Change

315 638 338 638 328 437 507 495 343 1,038 367 1,115 1,984 959 932 428 1,771 1,825 1,541

242 546 294 546 173 532 430 491 290 1,019 352 1,270 2,116 1,157 927 463 2,499 2,059 1,702

-23 -14 -13 -7 -47 + 10 -15 0 -15 -1 -4 + 14 + 6 + 20 0 8 +41 + 13 + 10

Source: Department of Employment Gazette, Vol. 97, N o . 11, Historical Supplement N o . 2.

bomb", as it has been called, is bound to prompt employers to consider ways of overcoming skill shortages. A number o f employers are looking into possibilities for changing familiar work patterns and hours so that female and retired employees will be more easily retained. Finally, the serious economic recession which occurred during the 1980s led many organizations to reduce their work forces and seek maximum efficiency of those remaining. N e w technology, encompassing applications o f microelectronics, computers, information technology, and robotics have been introduced on an unprecedented scale, particularly in the private sector, while those remaining in employment have been required to work with greater degrees of

flexibility

order to sharpen up responses to volatile and competitive product markets.

in

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The Legal Framework In Great Britain, the law has played a minimal role in regulating patterns of growth or structure of the major industrial relations institutions. The State has also refrained from modelling the processes of interaction between the parties through collective bargaining, and agreements made between them will not normally have the force of law. In recent years significant modifications have occurred in the legal framework as part of the government's overall objective of deregulating the labour market. This has taken the form of a reduction in the scope of legal protection not only for individuals at work, but also those underpinning the rights of trade unions. British statute law can, however, be seen to impinge on the employment relationship in three main ways. First, the law provides a "floor of rights" for the individual on matters such as protection from unfair dismissal, compensation for redundancy, equal opportunities and pay, maternity leave, time for union and public duties, which are covered in the 1988 Employment Protection (Consolidation) Act, and grievances relating to health and safety at work, which are addressed in the 1974 Health and Safety at Work Act. Although maternity pay and maternity leave have recently been made more difficult to obtain, time off is now available for antenatal care. In 1986, largely in response to European Community (E.C.) regulations, a new right to claim equal pay for work of equal value was introduced as the 1970 Equal Pay Act (and amendments). Secondly, a legal framework is provided for collective bargaining through provisions on disclosure of information, consultation on redundancy and pensions, appointment of safety representatives, and paid time off work for union officials as part of the Employment Protection (Consolidation) Act 1978. Under the Labour government's 1975 Employment Protection Act a recognition procedure was provided for independent trade unions. This was abolished by the Conservative government in 1980, although the Advisory Conciliation and Arbitration Service (ACAS) can still be requested to conciliate in a dispute over recognition. However, E.C. regulations have tended to contradict the effect of these legal changes: employment contracts, recognition and collective agreements are now protected following takeovers or the restructuring of existing companies under the Transfer of Undertakings (Protection of Employment) Regulations, 1985. In addition, in 1988 a step by step process towards restricting the legitimacy of the closed shop (an arrangement designed to compel all potential union members in a particular workplace to join a relevant union) was continued when remaining statutory immunities protecting these were removed through the passage of the 1988 Employment Act. Additionally, legal provisions exist to create a safety net for those not covered by collective bargaining. Wages councils, which comprise trade union, employer, and independent representatives, have set legally enforceable minimum

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wage rates, overtime and piecework rates, holiday pay, and entitlements in industries where sections of the workforce fall below defined low pay limits. In 1986, however, their powers were severely restricted to the setting of single minimum hourly rates and a single overtime rate, and young people under 21 were removed from their jurisdiction under the Wages Act. Thirdly, the law serves to restrict the ambit of lawful trade union action relating to industrial conflict and picketing. This aspect of law is still based on the "golden formula", established in the 1906 Trade Disputes Act, which protects trade unions from legal intervention provided they act "in contemplation of furtherance of a trade dispute". The extent of this immunity has varied during its lengthy existence, normally according to the political complexion of the government in power. The employment acts of the 1980s have, however, redefined the scope of the immunity of prohibited "political" and "secondary" action. Permissible striking and picketing can occur only at the workers' own place of employment, therefore sympathetic action is excluded. Also, under the Trade Union Act of 1984, immunities were further restricted to those unions gaining majority support for industrial action in a secret ballot held no more than four weeks before the planned action. In recent years long standing traditions have been broken, as have certain articles of faith concerning trade union autonomy, through legislation designed to regulate internal trade union affairs with the objective of "passing the unions back to their members".' All members of the unions' national executive body must now be elected by the membership at least every five years by an independently scrutinized secret postal ballot as set out in the Trade Union Act 1984. A ballot must now also take place every ten years for unions to retain "political funds". This is a significant piece of legislation as the Labour Party has relied on trade union funding. However, to date, support for the continuation of such funds has been overwhelming. Finally, the Employment Act of 1988 provides members with the right not to be disciplined by the union for crossing picket lines, and a Commissioner for members' rights has been established.

Trade Unions Trade unions developed early in Britain, their establishment being prompted by the onset of the factory system of production which brought workers together in large groups and subjected them collectively to standardized and disciplined regulation of employment. In order to be able to exert some countervailing power against managerial authority, workers joined together, often compelling union membership through the operation of closed shops which have been a key mechanism in gaining solidarity. In their formative years the emerging trade

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unions received unfavourable treatment from the Courts, which undoubtedly contributed to a negative view, on the part of unionists, of assistance from outside the union movement. "Most workers want nothing more of the law than it should leave them alone" (Wedderburn, 1986:1). The current complex structure of British trade unionism may be partly explained by the absence of a guiding hand, and the emphasis on "bottom up" development. At establishment level, a number of unions have often been recognized for bargaining purposes; the phenomenon of multiunionism sometimes being blamed for fragmenting bargaining arrangements, promoting inter-union conflict, and entrenching demarcation and inflexible working practices. However, difficulties have been overcome through the setting up of joint councils, and through voluntary guidelines formulated by the Trade Unions Congress (TUC). Taking a broader, national perspective, important structural changes have occurred over the last couple of decades. There has been a move away from industrial and general unions organizing predominantly male manual workers in traditional industries, towards more broadly based organizations, spreading into the service sector to encompass white collar workers and females. From 1960-1980 the number of unions fell by one-third despite an overall increase in union membership, the average size of unions doubling from 15,000 to 30,000 members. Consequently, a few giant unions seem to be increasingly dominating the scene. At the end of 1989 there were 309 unions in Great Britain, with a total of 10.2 million members around 90 of these being affiliated to the main national grouping of unions known as the Trades Union Congress (TUC) (Department of Employment Gazette, 1991:337). Membership in the TUC amounts to approximately 90 percent of total union membership in Great Britain, as it is the larger unions which affiliate. Union membership levels displayed a generally upward trend until the late 1970s, particularly over the period from 1969-1979. Within this overall trend, changing patterns in union membership reflect changes in British industrial structure. Manual potential membership has declined more or less continuously since the early 1930s while white collar potential membership has grown rapidly throughout the 20th century. Since 1969, union density has increased amongst white collar workers, as it has amongst females (Bain and Price, 1983:7, 9). In the 1980s previous growth trends in union membership have been reversed. This can be attributed to a combination of factors although of significance has been the high level of unemployment which has adversely affected the potency of trade unions, particularly at shop floor level. This has occurred within a broader political and legal context in which the tide has turned against positive encouragement of trade union recognition since 1979. Furthermore there is limited scope for organization into the expanding services sector, which is characterized by a small average establishment size, a large number of part-time workers, and high labour turnover.

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Table 2: TUC affiliated unions with over 100,000 members in 1960, 1979, and 1988 Union* Transport and General Workers Union Amalgamated Engineering Union General Municipal Boilermakers and Allied Trade Unions National Union of Public Employees National and Local Government Officers Association Association of Scientific Technical and Managerial Stafff Union of Shop Distributive And Allied Workers Electrical Electronic Telecommunications and Plumbing Unioni Union of Construction Allied Trades and Technicians Technical Administrative and Supervisory Sectionf National Union of Teachers Confederation of Health Service Employees Union of Communication Workers Society of Graphical and Allied Trades National Union of Mineworkers Banking Insurance and Finance Union National Association of Schoolmasters and Union of Women Teachers National Communications Union Civil and Public Services Association National Graphical Association Assistant Masters and Mistresses Association National Union of Railwaymen Clearing Bank Union

1960

1979

1988

1,302.000 937.000 796.000

2,086.000 1,298.000 967.000

1,349.000 815.000 803.000

200.000 274.000

692.000 753.000

651.000 759.000

491.000

653.000

355.000

470.000

387.000

243.000

420.000

369.000

192.000

348.000

256.000

—

—

245.000 —

166.000 158.000 586.000 — —

—

140.000 — —

334.000 —

201.000

—

249.000 213.000

225.000 208.000

203.000 206.000 260.000 132.000 122.000

198.000 196.000 187.000 166.000 163.000

126.000 224.000 111.000

151.000 149.000 131.000 129.000

—

180.000 —

118.000 113.000

Source: TUC Annual Reports (TUC, 1961, 1980, 1988 * Some of these unions had different titles in 1960 and 1979. t Merged in 1988 to become the Manufacturing Science and Finance Union. Î Expelled from the TUC in 1988.

Unions themselves possess a variety of organizational forms. Some have always sought to maximize strength by restricting entry exclusively to skilled workers, but the dominant form is the large general union which organizes

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Table 3: Trade unions, numbers and membership 1979-•1989) Year

Number of unions at end of year

Total membership at end of year

Percentage change in membership since previous year

1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

453 438 414 408 394 375 370 335 330 315 309

13,289 12,947 12,106 11,593 11,236 10,994 10,821 10,539 10,475 10,376 10,158

+ 1.3 -2.6 -6.5 -4.2 -3.1 -3.2 -1.6 -2.6 -0.6 -0.9 -2.1

Source: Department of Employment Gazette, June 1991.

across industries and throughout company hierarchies. The objectives of British trade unions could primarily be defined as "industrial" and they invariably possess autonomy in the execution of collective bargaining. British unions have traditionally displayed a broad range of objectives, but, by and large, there has been an emphasis on industrial matters with a focus on the improvement of terms and conditions of employment through collective bargaining. In pursuing fundamentally economic objectives, trade unions have not always seen attempts to influence government as being inappropriate. Indeed unions played a major part in the foundation of the Labour Party, and many currently sponsor Labour Members of Parliament as well as directly financing the Party through political funds. Unions play an important role in the formulation of Labour Party policy, and, when in power, it has tended towards corporatist arrangements with national trade union institutions, involving them in national, legal, and economic regulation. In contrast, the approach of the current government towards the economic management of the country has been such that the TUC has been excluded from the corridors of power, and trade unions from most areas of discussion on national economic policy. Internal organization and democratic mechanisms within trade unions reflect their preference for autonomy as well as the bottom up nature of developments. The workplace has always been a central focus of trade union activity, and the shop steward, the workplace representative, a central figure. Expanding trade union institutions have therefore been bound to establish representative struc-

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tures to ensure that they have been in tune with branch opinion, although inevitably with growth, bureaucratic constraints have been evident.2 The locus of power within unions tends to reflect the predominant level of collective bargaining in the relevant sector, therefore in public sector unions there is a tendency towards centralization, as national level bargaining predominates. However, recently there has been a general move towards decentralization, and some large unions, particularly the Transport and General Workers Union (TGWU), have broadened the authority of the shop steward to formally include collective bargaining. Such developments may be reinforced by the recent laws which have compelled secret ballots prior to the calling of strike action, and for the election of union officials. The TUC does not engage in collective bargaining on behalf of its members although it can intervene in industrial disputes. It represents member unions in consultation with outside bodies including government, and provides a wide range of information and services (including education) to affiliated unions, and helps to regulate inter-union conflict. In exercising each of these functions, the TUC proceeds in an entirely voluntary capacity.

Employers Employers in Britain fall into three main categories. Private businesses employ about 18 million people and in recent years there has been a trend towards amalgamations and mergers. At the beginning of the century, the hundred largest firms in Britain produced 15 percent of the net output. This figure now exceeds 50 percent (Hannah and Kay, 1977:3). A highly significant trend within the private sector has been the increasing profile of multinational enterprises, 25 percent of the largest private companies in Britain being foreign owned subsidiaries. Public corporations employ about one million people. These are publicly owned and managed by government appointed executives, and include nationalized industries such as coal, railways, the Post Office, as well as public organizations like the British Broadcasting Corporation (BBC). These can be distinguished from public services, which employ about five million people, including the police, the Civil Service, the National Health Service (NHS), and local authorities. Funds for these bodies are raised through national insurance, taxation, and local community charges. In regard to employer associations, the first national employers' associations emerged toward the end of the nineteenth century in order to 1) protect the "right to manage", and 2) present a unified employer front in response to the challenges posed by trade unions. As with trade unions, the number of employers' associations has declined over the years. Nevertheless, in 1989 there

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were just over 300 of them with a total membership of over 308,000 employers or local associations of employers (Annual Report of the Certification Officer, 1990:50). The national "umbrella" group is the Confederation of British Industry (CBI) which represents over 10,000 members directly. Private sector employers have seen a number of benefits in joining employers' associations for industrial relations purposes. In the past, employers' associations have played a major role in collective bargaining on behalf of constituent organizations at industry level. The range of negotiable issues could be clearly defined at this level, and a consistent approach to wage determination would prevent wage cutting by competitors or "whipsawing" (i.e., "picking o f f ' more vulnerable employers) by trade unions. The establishment of industry wide disputes procedures has also encouraged the resolution of disputes away from the workplace. In recent years employers' associations have become less influential in the determination of actual rates of pay, as there has been a tendency towards decentralization of bargaining levels. In a number of industries, especially engineering, they are still responsible for setting minima, which can be supplemented at the workplace, but employers' associations can still determine actual working time and implement national disputes procedures. Although they are still regarded as important institutions, a major function of associations is now the provision of information to member companies on matters such as comparative wage rates, labour law, and payment systems, as well as representing members in, for example, industrial tribunals. In fact, the extent to which employers' associations represent cohesive bodies varies from sector to sector, yet, in general, they tend to be loosely knit bodies. Greater unity tends to be displayed in shipping, footwear, and the docks. These industries comprise relatively small companies which benefit from pooling resources, and from adopting a common strategic approach in the management of industrial relations. 3 The CBI, like the TUC, does not engage in collective bargaining on behalf of its constituent organizations. The confederation has a major role in representing the interests of employers, especially to government, and in providing information to British industry. The internal organization of the CBI reflects a pattern which is common to most employers' associations in that it is made up of a pluralistic group of members over which the leadership has little authority. Decision-making processes tend to be based on discussion and debate rather than on formal democratic processes. Furthermore, the status of these "umbrella" groups as representative bodies is determined by the extent to which government pursues tripartite or corporatist approaches to economic management of the country. The non-interventionist and laissez-faire economic policy adopted by the current government has lowered the profile of national representative institutions.

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In recent years, there has been a pronounced trend towards individual companies adopting autonomous and sophisticated approaches to the management of their own industrial relations both with regard to pay determination and consultative arrangements. This development has enabled companies to cement the link between reward systems and employee and corporate performance. There has been, for example, a growth in profit sharing, with government approved schemes qualifying for tax concessions. Parallel changes have occurred in the public sector of industry, these being stimulated primarily by the application of cash limits by government which have meant that budgets have not been maintained in real terms. Consequently, a performance consciousness has permeated this sector with, for example, individual performance appraisal and merit pay being introduced into education, the civil service, and the NHS.

The Government The role of government in industrial relations has traditionally been one of non-interference, with successive governments having preferred a "hands-off' profile. The "voluntary" tradition has implied autonomy for the major interest groups in the pursuit of their objectives, and a preference for self-regulation of terms and conditions of employment, consistent with pluralist political traditions. For a brief, unhappy period following the enactment of the Industrial Relations Act, 1971, the then Conservative government felt the full effects of its attempt to break this tradition. The legislation, which aimed to impose a set of highly legalistic concepts and procedures, led to organized non-compliance on the part of trade unions and to employers distancing themselves from the legislation. Nevertheless, as we shall see, the State does possess functions as a major employer, an economic manager, a law-maker, and a provider of specialist services. To further these roles, an institutional framework has been established by the government which consists of a number of important bodies and agencies. Industrial Tribunals were set up in 1965, and are empowered to make jurisdiction in respect of disputes arising from individual statutory rights, or related matters, that are discussed in the next section. They consist of a lawyer chairperson and two "sidemen", one from the side of the employee and one from management. Industrial Tribunals differ from conventional courts as they hear cases from individuals as opposed to representatives. Important bodies have also been established to encourage or compel compliance with fundamental employment laws, for example, the Health and Safety Executive, the Equal Opportunities Commission, and the Commission for Racial Equality.

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Specialist services to all sides of industry are provided by the Advisory Conciliation and Arbitration Service (ACAS); its terms of reference are to promote the improvement of industrial relations and to encourage the extension and, where necessary, the reform of collective bargaining. Apart from their capacity as law maker and public sector employer, British governments have maintained an important role as manager of the national economy. This has involved the pursuit of economic policies designed to contain the rate of inflation and these have impinged on industrial relations processes. Throughout the 1960s and 1970s both Labour and Conservative governments aimed to control pay increases through the implementation of incomes policies which normally did not possess legal force. These policies have rarely been successful in achieving their objectives and towards the late 1970s they became increasingly discredited as various groups of employees actively resisted this form of restraint on the movement of the labour market. Incomes policies have created particular problems in the public sector, as governments have applied these policies most rigidly in respect of their own employees. The principle of incomes policy has been rejected by the current government, which, as previously discussed, has relied on the doctrine of monetarism and restrictions on the money supply in order to tackle inflation. Nevertheless, in the public sector, the application of spending or cash limits has indirectly suppressed the rate of pay increases. On a broader front, high unemployment and a changing legal and economic environment has tended to undermine the position of organized labour. Governments have also traditionally facilitated the processes of mediation and arbitration, although this has always been in the form of a supplement to the voluntary arrangements formulated by the parties themselves to achieve compromise. The contemporary third party is ACAS, which was established by the Labour government in 1974 to offer advice, conciliation, and arbitration services. It is independent and governed by a tripartite board consisting of employer and union representatives and academics. The service provided by ACAS is free, and any recommendations it makes are voluntary in nature and do not carry the force of law. The Service does not normally intervene unless and until any agreed procedures for direct negotiations or internal appeals procedures have been exhausted. Arbitration is used as an instrument of last resort, with the consent of all the parties concerned. Since the early 1970s it can be argued that the principles of non-State interference and autonomy of the collective industrial relations parties have become less pervasive. From 1974 to 1979 the Labour government entered into a "Social Contract" with national trade union and employer organizations, during which time a number of key trade union objectives were implemented through the legislative process, and economic policies favouring the unions were pursued, in return for compliance and assistance of trade union leaders in the

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application of incomes policy. However, assertions regarding corporatist developments must be tempered by the knowledge that trade union leadership found considerable difficulty in carrying members with them in their accord with the Labour government, and the Social Contract was ultimately breached in the "Winter of Discontent" (1978-1979), when many groups of workers took industrial action to support wage claims in defiance of the government's incomes policy. In the 1980s free market oriented economic policies, coupled with laws which intervene in the internal affairs of trade unions, and which seriously hamper them in their pursuit of collective goals, have led to a sharpened focus on the individual employment relationship between employer and employee. Previous voluntary traditions have rested on assumptions concerning trade union strength and autonomy, consistent with the notion of collective laissez-faire. Such assumptions may not be realistic in the current climate.

Collective Bargaining in Action Collective bargaining remains the main method of determining the terms and conditions of employment in Great Britain with over two-thirds of employees having their pay affected by collective bargaining arrangements. Nearly all public sector workers fall within the scope of a collective agreement and whilst coverage varies in the private sector, it is likely to be greater in larger establishments. The nature of British collective bargaining is voluntary. Outside the public sector there is no legal obligation on employers to recognize trade unions and employers and union representatives determine the content of collective agreements which are hardly ever legally binding. The scope of collective agreements in terms of subject matter, varies considerably, although it tends to be broader in the public sector. Typically collective agreements will contain matters of substance such as pay, hours of work, working conditions, staffing arrangements, and working practices, as well as procedural arrangements relating to disputes, grievances, and other matters. In general the form of collective agreements is not highly detailed and they do not specify fixed periods of application. Rates of pay have been traditionally renegotiated each year, although there is a recent trend towards longer term agreements (Brewster and Connock, 1985:94). An issue which has been the subject of much public policy debate and of strategic consideration by both employers and trade unions is the level at which collective bargaining should occur within industries. The question as to whether bargaining should be centralized or decentralized has been viewed as critical in the determination of patterns of control.

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Until the 1960s, although variations did exist, employers generally combined for bargaining purposes, and negotiated with trade unions at industry level. During the 1960s a growing rate of inflation and a decline in the competitiveness of Britain in international markets led prominent politicians and employer representatives to call for a review of industrial relations with special reference to alleged problems within the system, in particular, overmanning, restrictive practices, a high level of strike activity, and excessive "wage drift" (i.e., actual rates of pay being in excess of formally determined levels). From 1964-1968 a Royal Commission on Trade Unions and Employers Associations comprising senior industrialists, trade unionists, and academics under the chairmanship of Lord Donovan conducted a thorough analysis of major institutions and practices. The 1968 influential report of the commission, in its diagnosis of the problem, asserted that the central defect in the British system of industrial relations was the failure of the "official" system of employers' associations and trade unions to regulate actual behaviour at the place of work. The Report highlighted a long-standing concern which it termed the "challenge from below", a process whereby "custom and practice", and informal agreements made between line managers and shop stewards were held to be undermining the authority of industry-wide agreements. The majority of commissioners advocated reform through a decentralization of collective bargaining and through elaboration of voluntary collective bargaining mechanisms at this level. Company managements were to formulate authoritative industrial policies and procedures, and were to formally enter into bargaining arrangements with shop stewards. 4 There is evidence to suggest that changes have occurred in institutional and bargaining arrangements which comply with the broad thrust of the Donovan recommendations. In many workplaces, grievance handling and negotiating procedures have been formalized and the position of stewards consolidated. Furthermore, survey results indicate that the individual establishment is now the most important level for the determination of manual workers' rates of pay. Nevertheless, pay processes and determination of terms and conditions of employment are still far from tidy, as many companies conduct a series of bargaining exercises at different levels, and often different subjects will be negotiated at each level (Daniel and Millward, 1985:197; Brown, 1981:26-50). In the public sector, however, collective bargaining remains predominantly centralized. In the late 1980s the trend toward decentralization of bargaining has continued, national bargaining arrangements having been ended in some important industries. A major explanation behind this development is the trend toward dividing businesses into separate product, cost, and profit centers, whilst relating pay to organization performance and local labour market conditions. Such developments have even occurred in parts of the public sector in the context of changing government economic policy and the influence of privatiza-

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tion. For example, at British Rail, it has been proposed that this single large business with a high degree of central management control should be divided into a number of independent operating units with their own objectives and targets (ACAS Annual Report, 1988:9).

The Pattern of Strike Activity Overall Trends International statistics, although not entirely reliable, would place Britain approximately mid-way in a table of strike activity in developed countries aggregated over the last fifteen years. The pattern of strike activity in Great Britain has been irregular, both over time and across industries. Explaining such variations is an exercise fraught with difficulty and unreliability, but a number of broad indications may be offered. From 1960 to 1970 an overall but gradual increase occurred in the volume of strike activity. This can be associated with an increase in the volume of workplace bargaining and a confident shop floor movement coupled with downward pressure on workers' real wages caused by price inflation. Shop floor strength was complemented by relatively low levels of unemployment. The breakdown of wage restraint policies at the end of this decade may also have prompted an upward shift in the level of strike activity. In the 1970s the level of strike activity fluctuated considerably. During this decade, a number of incomes policies were applied, and some correlation is apparent between the more rigid phases of incomes policy and the level of strike activity, particularly towards the end of the 1970s and the Winter of Discontent. A constraining force on strike activity was rising unemployment and, to an extent, the number of strikes varied according to the precise state of the labour market. In the 1980s high levels of unemployment have been associated with a dramatic fall in the number of strikes. Coal mining, in the 1960s, was responsible for nearly 60 percent of all strikes. However, by 1970 this proportion had fallen to 4 percent. The decline in strike activity in the coal industry can be attributed to declining levels of employment and centralization (until recently) in bargaining structure. Throughout the last twenty years five industries have been consistently strike prone: coal, the docks, iron and steel, shipbuilding, and motor vehicles. Again, explanations cannot be definite, although the following factors appear to be positively associated with a high propensity to strike: high average size of plant within the industry, high average wage levels, fragmented bargaining and fluctuating earnings, and a well-developed union organization. 5

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UNEMPLOYMENT: United Kingdom Million

Seasonally adjusted

Figure 1: Unemployment: United Kingdom Seasonally adjusted unemployment consistent with current coverage. Source: Department of Employment Gazette. December 1990.

Table 4: United Kingdom ... working days lost through industrial disputes, per thousand employees in all industries and services 1979 — 1988

1979 1980 1981 1982 1983

1,270 520 190 250 180

1984 1985 1986 1987 1988

1,280 300 90 160 170

Source: Department of Employment Gazette, December, 1990.

Contemporary Patterns Although the level of strike activity has declined considerably over the past decade, certain key trends are apparent. There has been a re-emergence of the large official strike, most notably the mining strike of 1983-1984, and increased incidence of strike activity in the public sector. Over this period, previously strike free groups have taken industrial action for the first time, including civil servants, health service, and local authority workers. A major explanatory factor behind this development is the declining set of differentials between these employees and their counterparts in the private sector, and also the defence of

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jobs in the face of nationalization. Across all industries the major stated cause for strike activity in the early 1980s is still pay. 6 As noted above, employers now possess access to a range of legal instruments that can be used to curtail industrial action. However, there is evidence to suggest that these measures have had only a marginal influence on strike activity. In major disputes these laws were used by newspaper publishers against the printing unions, and by sea-going ferry operators against the National Union of Seamen (NUS). A new development in the 1980s was the readiness of some important trade unions to forfeit the strike weapon and to enter into apparently more collaborative arrangements with employers. In particular the Electrical, Electronic, Telecommunications and Plumbing Union (EETPU) has entered into a number of single union/no strike deals, most notably with Japanese companies (e.g., with Toshiba in 1981). Such developments are to be viewed within a context of increased competition between trade unions for members. On the other hand, certain prominent groups have engaged in industrial action but only in a few cases has this resulted in success from the trade union's point of view. The Seamen's strike in 1988 virtually collapsed, and ended with the employer dismissing the strikers and withdrawing union recognition, while the Courts imposed fines and sequestrated the union's assets.

Current Trends in British Industrial Relations Enterprises in Great Britain are operating in an increasingly competitive and international environment. The British economy has always been a relatively open market and in recent years very keen competition, especially from the Far East, has led to the need to adopt dynamic and cost-effective production systems. Consequent developments in the management of employment have included movements towards flexible working practices in relation to hours worked and tasks performed. A number of organizations have broken down demarcation between jobs and have rewarded more versatile employees. In the pursuit of these objectives, some large companies have managed to successfully dilute craft-based multi-unionism and have instead established single-union arrangements. The introduction of new technology into offices and factories over the last ten years has perpetuated the removal of division between jobs and has served to further managements' overall objective of increasing labour utilization. In many cases new technology has been introduced without consultation (Daniel, 1987:282). The objective of improving labour utilization has also been pursued by management through the introduction of new patterns of pay which reward

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employees on the basis of their own, or their organization's performance. These initiatives either supplant, or add to, rates which have been agreed with trade union representatives and which apply to broader categories of employees. Developments have been supported through the decentralization of bargaining and the establishment of profit-centers, both in the public and private sectors. Attempts by management to obtain individual employee commitment have been reinforced through the development of more sophisticated and extensive communication systems which have sometimes bypassed trade unions, and, in some cases, through an extension of worker participation. A related development has been single-status for all employees (the extension of white collar conditions for blue collar employees). Many of these developments were originally associated with Japanese companies locating in Britain, although they have now spread to some other major companies, and are consistent with the elaboration of emerging human resource management techniques which focus upon the effective management of the individual "human resource". Through the implementation of more sophisticated recruitment, training, and reward systems, the aim of a number of major organizations has been to gain a fuller commitment of the individual employee to the achievement of organizational goals. Consequently, the approach emphasizes the importance of integrating personnel planning functions into corporate planning, to maximizing the quality of the employee and involving them in the quality of the product or service, and to promoting flexible organizational structures. These developments have occurred alongside more assertive action taken by both government and employers to establish the right to manage. This essentially has referred to a process in which some managements have sought to minimize the influence of the representatives of organized labour in key areas of decision-making. Significant examples of this have occurred in the public sector and have concerned the government's own employees. In 1984, the government banned trade unions at the Government Communications Headquarters (GCHQ) on the grounds that they were incompatible with the national interest, replacing them with an internal staff association. The most significant dispute of the 1980s was the Miners' Strike (1984-1985), the outcome of which has undoubtedly impacted upon subsequent power relationships between employers and trade unions. The National Union of Mineworkers (NUM) had been regarded as the spearhead of the union movement, but by the end of this long and bitter dispute, in which a key management objective was to break even in the short term, the NUM emerged divided, and the National Coal Board had asserted its right to close pits on the basis of economic criteria. 7 These developments clearly cast doubt on the future role of trade unions, but they have responded to the challenges presented in a number of ways. In recent years there has been an upward trend in mergers between unions, mainly in order to strengthen their financial position. The TUC's sixth and tenth largest

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white collar unions have merged to form the Manufacturing, Science and Finance Union (MSF) which comprises 700,000 members (Towers, 1989:181). Unions have also reviewed critically their own objectives and policies. In recent years there has been an attempt to sharpen economic objectives to take account of the apparently more instrumental orientation of white collar and professional workers. For example, the EETPU offers private health insurance in some collective agreements. The support by a minority of union leaderships for more strident forms of business unionism has led to conflict between trade unions, and the EETPU was expelled by the TUC for entering into single-union, no-strike agreements with employers. It is clear that some major unions are modifying both policy and internal structure to appeal to potential and actual female members. The TGWU is one of the unions which has a national women's officer responsible for raising the profile of women within this large general union. Finally, although some companies in Great Britain are already European in their outlook, the inception of the Single European Market in 1992, is bound to affect the pattern of industrial relations in Great Britain, as European Economic Community (E.E.C.) legislation will be forthcoming to promote free movement of labour across Europe and a harmonized approach to social policy. An important aspect of European integration will be the Social Charter, which lays down a basic set of rights in the field of employment which member countries are expected to abide by. Although it is not yet clear which aspects will be mandatory, British unions will hope to benefit from successful implementation of European measures on harmonization of pay, collective bargaining arrangements, employee involvement, union membership, and health and safety at work. As could be predicted, the Conservative government is less welcoming of these developments, as such standardization tends to run counter to the strong belief in the workings of the free market. The decade to come is bound to be one of great change, with much of this being stimulated by increasingly significant international influences.

Notes [1] This is a quotation appearing in the Sunday Times (28 November 1982) in which the then Secretary of State for Employment, Norman Tebbit, explains the reasons for introducing legislation on trade union reforms. [2] For further information on trade union organization and structure see Hyman (1983:41-48). [3] For further information on patterns of organization of employers' associations see Sisson (1983:122-125). [4] See Report of the Royal Commission on Trade Unions and Employers Associations (1968:261-264). [5] For further information on strike incidence and causation see Edwards (1983:211-221).

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[6] For further discussion of the distribution of strike activity see Edwards (1983:221-228). [7] See McGregor (1987) for an insight into the managerial (and governmental) perspective on the miners' strike 1984. McGregor writes as chairman of the National Coal Board at the time of the dispute, and his discussion of the profiles and strategies of major actors reveals aspects of deeper political and economic changes underlying the dispute, which impacted upon subsequent power relationships between organized labour and government in the U.K..

References Annual Reports of the Certification Officer for Trade Unions and Employers ' Associations (1980-1990). London: Her Majesty's Stationary Office (HMSO). Bain, G. S. and R. Price (1983) "Union Growth: Dimensions, Determinants and Destiny". In G. S. Bain (ed.), Industrial Relations in Britain, 3-33. Oxford: Blackwell. Bassett, P. (1986) Strike Free. London: MacMillan. Bird, D„ M. Stevens, A. Yates (1991) "Membership of Trade Unions in 1989". In Department of Employment Gazette, June. Brewster, C. and S. Connock (1985) Industrial Relations: Cost Effective Strategies. London: MacMillan. Brown, W. (1981) The Changing Contours of British Industrial Relations. Oxford: Blackwell. Daniel, W. W. (1987) Workplace Industrial Relations and Technical Change. London: Frances Printer/Policy Studies Institute (PCI). Daniel, W. and N. Millward (1985) British Workplace Industrial Relations 1980-84. London: Heinemann. Edwards, P. K. (1983) "The Pattern of Collective Industrial Action". In G. S. Bain (ed.), Industrial Relations in Britain, 147-163. Oxford: Blackwell. Employment Acts (1980, 1982, 1988 and 1990). London: HMSO. Farnham, D. and J. Pimlott (1990) Understanding Industrial Relations. London: Cassell. Hannah, L. and J. Kay (1977) Concentration in Modern Industry. London: MacMillan. Hyman, R. (1983) "Trade Unions: Structure Policies and Politics". In G. S. Bain (ed.), Industrial Relations in Britain, 35-65. Oxford: Blackwell. McGregor, I. (1986) The Enemy Within. London: Collins. Report of the Committee of Inquiry on Industrial Democracy (1977). Department of Trade, London: HMSO. Report of the Royal Commission on Trade Unions and Employers Associations (1968). London: HMSO. Secretary of State for Employment (1988) Annual Report of the Advisory, Conciliation and Arbritration Service. London: A. C. A. S.. Secretary of State for Employment (1989) Annual Report of the Advisory, Conciliation and Arbritration Service. London: A. C. A. S.. Sisson, K. (1983) "Employers' Organizations in Industrial Relations in Britain". In G. S. Bain (ed.), Industrial Relations in Britain, 121-134. Oxford: Blackwell.

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Sisson, K. (ed.) (1989) Personnel Management in Britain. Oxford: Blackwell. Social Trends (1989). London: HMSO. Towers, B. (1989) "Running the Gauntlet, British Trade Unions under Thatcher 1979-1988". In Industrial and Labour Relations Review, Vol. 42, No. 2, January, 95-119. Trade Union Act (1984). London: HMSO. Trade Union Congress (1939) Disputes, Principles and Procedures. London: TUC. Trade Union Congress (1980) Annual Reports. London: TUC. Trade Union Congress (1989) Annual Reports. London: TUC. Wedderburn, K. W. Lord (1986) The Worker and the Law. Harmondsworth, Middlesex: Penguin.

India Kokila Doshi

India's industrial relation policy is influenced by the British rule, the International Labour Organaization (ILO), the Gandhian philosophy, and the objectives of planned economic development. Modern industrialization started in India during the middle of the 19th century, with the establishment of Indigo Plantations (1831), followed by cotton mills in Bombay (1853), and jute mills in Calcutta (1855). The labor-management relations at that time were essentially master-and-servant type. A series of legislative acts passed by the British government in India during the latter half of the 19th century were mainly to protect its commercial interests in the country. According to ILO (1957), the enactments such as Assam Labor Act, Workmen's Breach of Contract Act (1859), and Employers' and Workmen's (Disputes) Act of 1860, "aimed at protecting the social system against labor rather than protecting labor against the social system". The workers were dissatisfied with the long hours of work, low wages, and poor working conditions. However, the period between 1831 to 1918 was characterized by stray incidents of labor protests, lack of class consciousness, and concerted action. The first World War initiated a period of boom for the industry. However, the earnings of the workers did not keep pace with the rising prices and rising profits. As a result, there was intense labor unrest which found an outlet in an increased number of strikes. The period of 1919-1939 was marked by several significant developments. The establishment of the International Labor Organization (ILO) in 1919 and its subsequent policies and recommendations have tremendous impact on labor legislation and industrial relations in India. The formation of the first Central Trade Union - All India Trade Union Congress (AITUC) in 1920 was a significant event in the history of industrial relations. The Workmen's Compensation Act was passed in 1923. The Trade Unions Act, 1926, provided legal status to the trade unions. Increasing concern about the labor unrest resulted in the enactment of the Indian Trade Disputes Act, 1929 which provided conciliation machinery for bringing about industrial peace. The Royal Commission on Labor (1929-1931) made a comprehensive survey of labor problems in India and made recommendations for the health, safety, and welfare of the workers. During the Second World War, businesses made huge profits and workers demanded their share in growing industrial prosperity. Bonus and dearness allowances were granted to them, but the workers' dissatisfaction over the

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wages continued. To check the labor unrest, the government prohibited strikes under the Emergency Rules (Rule 81-A) of the Defense of India Rules. These rules provided for the compulsory adjudication of disputes between employers and workers."This emergency measure and procedure has now become a permanent feature of the industrial relations scene in India" (Punekar et al., 1988). Based on the need for tripartite consultative machinery of the ILO type and recommended by the Royal Commission on Labor, the Indian Labor Conference was instituted in 1942. The conference enabled the government to bring parties together on national issues concerning labor and management. It also developed norms and guidelines which subsequently shaped the pattern of industrial relations. In 1946, the Industrial Employment (Standing Orders) Act was passed to regulate terms and conditions of service.

Post-Independence Period The industrial relations policy since 1947 has been influenced by the Directive Principles of State Policy and objectives of planned economic development. The policy aimed at maintaining industrial peace, improving the well-being of the working class, and the building up of industrial democracy. Several legislative measures have been adopted to achieve these objectives. The Industrial Disputes Act of 1947 laid down a comprehensive machinery for the settlement of industrial disputes. "The Act retained one of the principal features of the Defense of India Rules, namely compulsory adjudication."The act seeks the prevention and settlement of industrial disputes in all industries through conciliation, arbitration, and adjudication. It introduced two new institutions - Works Committee and Industrial Tribunal. The act has been amended 34 times (latest amendment in 1984 being the last) and attempts have been made to expand the scope of the act to restrain the powers of employers to lay off their employees and to reduce the procedural delays. The act serves as the main pillar of industrial relations by providing the essential legal infrastructure and machinery to promote the harmonious relations between labor and management. Another important legislative measure guiding the labor relations has been the Trade Unions Act passed in 1926 and amended several times since 1947. In addition to these two acts, a series of legislation was passed in 1948 to safeguard the interest of the working class, e.g., Minimum Wage Act, Factories Act, and Employee's State Insurance Act. The era of economic planning was ushered in during 1951 with the first of a series of five year plans. The First Five Year Plan (1951-1956) stressed the objective of industrial peace for accelerated industrial production. Worker's right to association and collective bargaining were emphasized during this

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period. The Industrial Disputes Act was amended to provide for compensation in case of lay-off and retrenchment. The Provident Fund Law was also passed during the First Five Year Plan. The important development during the Second Five Year Plan (1956-1961) was the introduction of the Voluntary Code of Discipline to counteract unhealthy trends in litigation and delays in legal process. The plan also emphasized the importance of the preventive measures for achieving industrial peace. The plan recommended the participation of workers in management. During the Second Five Year Plan, the tripartite machinery (Indian Labor Conference) succeeded in developing certain norms and guidelines for needbased minimum wages, rationalization, etc., in addition to the introduction of the Code of Discipline. The Third Five Year Plan (1961-1966) expressed its faith in the voluntary approach and moral sanctions for the settlement of disputes. It suggested that the "workers' participation in management should be accepted as a fundamental principle and an urgent need". The plan developed the program for the extension of the scheme of Joint Management Councils. The Payment of Bonus Act was passed in 1965. The Industrial Truce Resolution - another voluntary arrangement - was adopted during the emergency caused by the Chinese War in 1962. The Fourth Five Year Plan (1969-1974) continued the earlier efforts. It emphasized that the priority will be given to the growth of healthy trade unions, works committees, collective bargaining, and voluntary arbitration. During the Fifth Five Year Plan (1974-1979), National Industrial Committees were set up for major industries like textiles, chemicals, and engineering. A National Apex Body representing employers and workers' organizations was also set up for the speedy resolution of industrial conflicts. In 1975, a scheme of workers' participation at the plant level was adopted by the government of India. The Sixth Five Year Plan (1980-1985) observed that "healthy industrial relations on which industrial harmony is founded, cannot be regarded as a matter of interest only to employers and workers, but also of vital concern to the community as a whole". The plan also stressed that workers' participation in management at the enterprise level, "should become an integral part of the industrial relations system to serve as an effective instrument of modern management". It should be made the vehicle of transforming attitudes of both employees and workers and establishing cooperative culture. It also reiterated the need for collective bargaining and effective arrangements to address the issue of inter-union rivalries and unfair practices. The plan observed that the legal framework or the voluntary arrangements were not effective in achieving the goal of industrial peace. It suggested that there is a need for change in the existing laws on trade unions and settlement provisions. To sum up, during the three and one half decades of planned development, successive five year plans emphasized the role of collective bargaining and voluntary arbitration for industrial peace. Building of industrial democracy was

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considered an important objective of the Plan policies toward industrial relations. The importance of workers' participation in management at the plant level was highlighted. In addition to the legal framework, voluntary arrangements have become an important dimension of the industrial relations policy in India.

Industrial Relations Actors Trade Unions Regarding the role of workers and their associations in India, the trade union movement started immediately after the first World War. Growing labor unrest, establishment of AITUC, and the Swaraj Movement led by Mahatma Gandhi inspired the birth and early beginnings of the movement. At its inception, the political element was introduced into the movement. The trade unions are organized at local, State, and national levels. "It is generally from the central level that the ideology of the important central federation of labor in India percolates down to state or local level" (Mamoria and Mamoria 1987:93). There are ten important central trade unions with a total membership of 6.1 million. (These figures do not include a large number of unregistered trade unions or trade unions not submitting returns.) One of the most powerful central trade unions is the Indian National Trade Union Congress (INTUC) which was established in 1947 to counteract the Communist influence of AITUC. INTUC is wedded to the Gandhian ideals of truth, non-violence, purity of means, and dignity of labor. As pointed out by the National Commission on Labor, in the early stages, formation of plant-level unions was the general trend. However, with the changing industrial scene, trade unions were organized as industry unions. In spite of a general pattern of industry-wide unions, craft unions have also developed in transport, some sections of ports and docks, and industries with modern technology. The Trade Unions Act, passed in 1926 but amended several times since 1947, provides for both the registration of trade unions and gives corporate and legal status to them. During the post-independence period, there has been a tremendous growth in the number of trade unions. However, the growth has remained uneven, industry-wise and area-wise. Overall, 28 percent of the workers are unionized. But, the degree of unionism varies widely from industry to industry and region to region. The textile industry, from which the labor-movement originated, is still the prime mover and center of trade union activities. In recent years, the trade unions movement has spread to the service sector which

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includes banking, insurance and government service. The growth of trade unions in the small-scale sector and rural areas is very slow. Despite the quantitative growth, trade unions in India are inherently weak for a number of reasons. First, most of the trade unions are small in size with membership below 300. The average membership varies between 600 and 800. "Second, an important factor limiting the effective functioning of unions... has been their financial weakness" (Government of India, 1969). The poor financial state of the trade unions is the result of inadequate membership strength. Third, there is dependence on external leadership, therefore trade unions tend to be dominated by the political parties. These factors have led to fragmentation and multiplicity of unions, and have contributed to inter-union and intra-union rivalries. Due to poverty and mass illiteracy among the working class, trade unions could not provide sound internal leadership. The existence of two or more unions in the same industry has created unnecessary competition and has proved to be a barrier in the successful functioning of the unions. Apart from these problems, the major problem facing the trade unions is that there is no provision at the national level for the statutory recognition of the trade unions by the employers. However, some State acts, like the Bombay Industrial Relations Act (1949), provided for the legal recognition of majority unions by the employers. In the rest of the country, employers recognize trade unions as bargaining agents only on the moral ground. The Code of Discipline (1958) laid down the criteria for the recognition of representative trade unions which are voluntarily adopted by the management. The lack of legal recognition of the trade unions at the national level greatly limits their collective bargaining powers.

Employers and their Organizations The attitudes of employers towards workers and their unions play a very important role in the effectiveness of the industrial relations system. The Trade Union Act of 1926 places them on par in the matter of rights and responsibilities. The origin of employers' organizations can be traced to the formation of Millowners' associations in the pre-1930 period. The period of 1931-1946 witnessed the growth of Chambers of Commerce, All-India Organization of Industrial Employers, Employers Federation of India, and All-India Manufacturers Organization. The employers associations have a three-tier structure - local associations, industrial associations, and All-India federations. The federations at the national level have been given representation on different tripartite consultative bodies, various committees, and wage boards. The main role of employers' organizations is to protect and promote the interests of their members, to provide information on labor legislation, to advise

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them on labor-management relations, to initiate and support the schemes for the workers' upliftment, and to establish harmonious relations between capital and labor. Today, industries such as jute, textiles, chemicals, engineering, tea, sugar, cement, and paper industries have strong organizations. "The employers/managements in India are not a homogeneous group, but rather a mixture of diverse groups with different attitudes to labor and different ways of dealing with it" (Punekar, 1988:308). On the one end of the scale, there are traditional employers with "authoritarian" or "paternalistic" attitudes who have hostile attitudes towards workers and their unions. They do not consider labor as a significant partner. On the other hand, there are "blue ribbon industries" (e.g., chemical or engineering which are influenced by the foreignownership firm) who practice modern management styles. The employers in these industries have accepted labor and trade unions as effective participants in industrial relations activities.

The Role of Government Government plays a dominant role in shaping the pattern of industrial relations in India. As a "law maker", government enacts the legislation to ensure harmonious relations between labor and management and provides for the legal and administrative machinery. As a "custodian of broader social interest" it accepts the responsibility to protect the interests of the weaker sections of the society and ensure equality of opportunities. With the tremendous growth of the public sector, government has also emerged as a "big employer". The role of the State is derived from the ideology developed by the constitution and the industrial policy resolutions. The Constitution of India has guaranteed some fundamental rights and has laid down a set of directive principles for achieving "democratic socialism" based on equality and social justice. Labor is on the Concurrent List on which both central as well as State governments have power to make laws. The directive principles, though not enforceable by law, are the sheet-anchor of the legislation passed by the central and State governments. India's constitution bears a close resemblence to the ILO Philadelphia Charter (1944). India's commitment to ILO is reflected in the emphasis on freedom, peace, individual dignity, and social justice. Articles 39 (equal pay for equal work), 41 (right to work, to education, and to public assistance), 42 (just and humane conditions of work, maternity benefits), 43 (secure living wage and decent standard of living), and 43A (secure participation of workers in the industry) reflect the constitutional obligations of the State and have influenced the direction of the State policy toward industrial relations.

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With the distinct commitment to the concept of the welfare State, "the government entered the field in a big way passing several acts relating to the different aspects of industrial work and workers, such as the Minimum Wages Act of 1948, the Factories Act of 1948, and the Employees State Insurance Act of 1948" (Punekar, 1988:302). The progress of legislation affecting workers and their interaction with the employers during the planned period has been remarkable. Through legislation such as the Payment of Bonus Act, Contract Labor Act, Maternity Benefit Act, Apprenticeship Act, and Equal Remuneration Act, the government has tried to provide the social security benefits and bring about equality and social justice. With the independence and the adoption of economic planning, the maintenance of industrial peace was accepted as a prime requisite for industrial progress. It is also realized that labor is a valuable partner in achieving economic development. Establishing harmonious relations between workers and employers has remained an important goal of the industrial relations policy of the government. It aims at prevention and peaceful settlement of industrial disputes. Although the emphasis is on collective bargaining and bipartite solutions, adjudication and regulatory aspects still form the core of industrial relations in India. There is a high degree of State intervention in the settlement of industrial disputes due to the emphasis on adjudication through tribunals and courts. The government has done little to strengthen the trade unions. As mentioned earlier, there is no statutory provision for the recognition of the trade unions at the All-India level. The trade unions are inherently weak also due to other socio-economic factors. This, combined with the lack of trust on the part of employers in trade unions and an atmosphere of antagonism, has resulted in the increasing reliance on government machinery for the solution of industrial conflicts. About 40 to 45 percent of the disputes are settled through government intervention. The growth of the public sector in India can be traced back to the Industrial Policy Resolution of 1948. State participation in industry was considered a necessary condition for rapid economic development and equal distribution of resources. With the adoption of a socialistic pattern of society and the Industrial Policy Resolution of 1956, the mixed economy of India leaned more and more toward expansion of the public sector. In 1985, there were 225 State enterprises in India. Between 1971 and 1985, the total employment in the organized sector showed an increase of 40 percent, whereas employment in the public sector increased by 62 percent during the same time period. The share of public sector employment as a percentage of the total employment increased from 61 percent in 1971 to over 70 percent in 1985. Thus, government has emerged as the largest industrial entrepreneur in recent years, and is looked upon as a "model employer". However, as will be discussed later, the state of industrial relations in the public sector shows that far from being a model employer, management in

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the public sector suffers from bureaucratic attitudes, ad-hoc decision-making, lack of leadership, and administrative limitations. To sum up, the government "started with a laissez-faire policy, followed it up with protective labor-legislation and paternal administration, actively interfered in the field of industrial relations treating it as a law and order problem, and subsequently extended its control over almost the entire labor field" (Sarma, 1984:28-29). The government is the most powerful frontline actor in the system of industrial relations in India.

The Nature of the Labor Relations Process Industrial Disputes: Magnitude and Causes Industrial disputes are common in a capitalist economy in which interests of employers and workers are often at variance. The progress of industrialization is accompanied by increases in industrial disputes in India. Industrial disputes often lead to direct action in the form of strikes and lock-outs. Strikes are resorted to by the workers to safeguard their interests, while lock-outs are resorted to by the employers to pressure the workers into accepting their terms and conditions. The widening base of industrial structure and diversification of industrial activity have increased the scope of industrial confrontations. Rising prices and rising costs of living have compelled workers to resort to strikes. The industrial disputes have resulted in the unfulfillment of plan targets and have disturbed industrial peace. The number of work-stoppages, workers involved, and man-days lost due to strikes and lock-outs have increased considerably over the planning period. In 1951 there were 1,071 work-stoppages involving 0.69 million workers which resulted in a total loss of 3.82 million man-days. In 1974 the number of disputes rose to 2,938 with 2.86 million workers involved and 40.26 million man-days lost. The imposition of a state of emergency in 1975 resulted in a decline of industrial disputes. However, the "pent-up" unrest found an outlet in an increased number of conflicts with the lifting of the state of emergency. In 1985-1986 total man-days lost fell to 27.76 million, but again rose to 39.47 million in 1987-1988. In more recent years, the share of lock-outs in the total time-loss equation has been increasing. The increase in lock-outs reflects the frequency with which labor pressures were met by management pressures. It also reflects traditional authoritarian attitudes and increasing strength among employers. In many cases, employers are forced to resort to lock-outs due to the growing violence and lack of discipline and in labor activities.

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Most of the strikes and lock-outs are concentrated in a few industrialized States. Manufacturing industries are responsible for two-thirds of the total disputes and three-fourths of the total time-loss. The majority of the disputes (about 60 percent) last for 10 days or less. However, there is a marked increase in the share of prolonged strikes (more than 30 days) since 1977. The proportion of "successful" disputes (in which workers' demands are met) has remained more or less constant at around 28 percent. The proportion of "indefinite" disputes has declined significantly and that of "unsuccessful" disputes has varied between 30 percent and 45 percent. Causes of conflict suggests that the two most important reasons have been "wages and allowance" and "personnel and retrenchment". Together they account for 60 percent of industrial disputes. Real earnings of the workers have gradually eroded due to rising prices. In addition, increasing competition, price-controls, and government restrictions on some industries have resulted in falling profits and resistance on the part of employers to meet the demands for higher wages and dearness allowance. The third most important cause of industrial disputes is the issue of bonus, which led the government to pass the Payment of Bonus Act in 1965. More recently, a growing share of labor unrest is due to discipline problems and violence. There seems to be a move away from the Gandhian principles of non-violence and trusteeship. The state of industrial relations in the public sector is far from satisfactory as well. Although government is looked upon as a "model employer", there is a significant increase in the number of disputes in the public sector. "The public sector accounts for between 25 to 35 percent of industrial disputes, 40 to 50 percent of the number of workers involved, and 15 to 20 percent of the man-days lost" (Punekar, 1988:346). The major industries which account for considerable loss of man-days in the public sector are transport, communication, utilities, mining, and manufacturing, whereas in the private sector, manufacturing alone accounts for three-fourths of the man-days lost. In addition, there is multiplicity of trade unions in the public sector as well. Industrial relations in the public sector are not very cordial due to the absence of systematic personnel policies, inter-union rivalry, political factors, lack of effective administrative machinery,bureaucracy, and prolonged decision making.

Prevention and Settlement of Disputes The necessity of preserving industrial peace is emphasized in five year plans. The First Five Year Plan, while recognizing the right of the workers to strike, stated that "the stress of the administration as well as the efforts of parties should, however, be on avoidance of disputes and on securing internal

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settlement". Several legal and voluntary measures have been adopted for the prevention of disputes. Establishment of works committees, appointment of labor welfare officers, establishment of grievance procedure and legislations concerning wages, and welfare of the workers are some of the examples of legal provisions made by the government. They aim at reducing the friction between workers and employers and resolving the differences before they take the form of disputes. The voluntary measures include the Code of Discipline evolved by the tripartite consultative machinery (Indian Labor Conference), formation of Joint Management Councils, and other programs encouraging workers' participation in management. If a dispute arises, the best way to settle it is through "mutual settlement, collective bargaining, and voluntary arbitration". The government's policy is to encourage bipartite dialogue and voluntary agreements arrived at through the cooperative spirit. However, if the two parties fail to reach an agreement, the Industrial Disputes Act (1947) provides for the legal machinery in the form of conciliation, arbitration, and adjudication. Conciliation is resorted to when labor and management are unable to reach an agreement and a dispute exists or is anticipated. The government may appoint a conciliation officer to mediate and promote the settlement. Conciliation is considered as an extension of collective bargaining with the help of a third party. If attempts at conciliation fail, the Industrial Disputes Act as amended in 1956, provides for voluntary arbitration in which parties to the dispute voluntarily refer the dispute to the arbitrator. The principle of voluntary arbitration is also incorporated in the Code of Discipline. Various plans have emphasized its importance also. The National Arbitration Board was established in 1967 to strengthen the system of voluntary arbitration. Through either compulsory arbitration or adjudication, parties are forced to arbitration by the appropriate government. The system of adjudication which was adopted as an emergency measure during World War II, has now become a permanent feature of the industrial relations machinery. For the purpose of adjudication, there is a three-tier system consisting of Labor Courts, Industrial Tribunals, and National Tribunals. In regards to the role of various measures for the settlement of disputes, collective bargaining is given prime importance by the government and the Code of Discipline. Efforts to encourage collective bargaining were established through joint consultative machinery, works committees, joint management councils, as well as bipartite National Industrial Committees. The National Commission on Labor (1966-1969) noted that the record of collective bargaining has not been unsatisfactory as is popularly believed. But there is a scope for its expansion. Collective bargining has been used in traditional industries like textile and plantation since World War II. In recent years, the practice has spread to the new industry groups with modern management styles and a high degree of professionalism. These industries include engineering, petroleum, chemicals, aluminum, etc. According to a study made by the Employers Federation of

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India, in the late 1960s, these four industries accounted for over 62 percent of the total collective agreements. Most of the collective agreements are reached at plant or enterprise level. In ports and docks, collective agreements have been the rule at individual centers. Industry level agreements are more common in textile, plantation, and coal industries. In the service sector - especially banking and insurance - collective agreements are reached at the national level. The scope of agreements has been widening. Although most of the agreements relate to wages, allowance, bonus, and retirement benefits, it is interesting to note that now issues such as modernization, productivity, and job satisfaction, are also included in the agreements. Overall, the long-term agreements (between 2 to 5 years) are on the increase. However, one of the weaknesses of collective bargaining is that it is often confrontational and is approached as a crisis situation. In most cases, the negotiations between employers and union start only after the labor-relations are strained and conflicts have developed. Collective bargaining is carried out in the atmosphere of hostility in many industries. The major hurdle in the success of collective bargaining in India is the absence of any legal provision at the national level for the recognition of trade unions. Employers are not legally bound to accept the trade unions as "sole bargaining agents". They are only under the moral pressure imposed by the Code of Discipline to recognize the trade unions. The absence of the "one union - one industry" system worsens the situation. The multiplicity of unions raises the issue of determining the majority union for the industry. As noted earlier, trade unions are inherently weak due to fragmentation, lack of financial resources, political dominance, and outside leadership. The process of collective bargaining is characterized by unequal strength of the workers and employers. The absence of truly representative, legally recognized strong trade unions combined with antagonistic attitudes of the employers has hindered the progress of collective bargaining. Works committees, Joint Management Councils, and Shop Councils which were considered to be the instruments for the promotion of collective bargaining have met with limited success. They have failed to establish "cooperative culture" mainly because the preconditions for the success of such measures are absent. The scheme of workers' participation has not developed from within - it is imposed from above. The workers cannot be true partners in industry where poverty and illiteracy are widespread. Due to a mutual trust between employers and unions, both parties have shown a distinct preference for the third party settlement. There is a growing reliance on government machinery for the settlement of disputes. Easy access to adjudication has discouraged the growth of self-reliant trade unions, collective bargaining, and voluntary arbitration. Only about 25 to 33 percent of the agreements are the result of collective bargaining. Arbitration plays an insignificant role in the settlement of disputes. Between 50 to 60 percent of the disputes

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are referred to adjudication. Although the system of adjudication has the interests of the workers at its center, by raising their wages and improving their working conditions, it is a time-consuming and costly alternative. There is a need for a gradual shift from adjudication to collective bargaining.

Current Trends One of the important characteristics of the industrial relations system is its interactive nature. "Changes take place within the system by way of a shift in ideologies in the values of the actors, the attitudes of and interactions among the performers; and also outside the industrial relations system, in such other areas as technology, market, legal sanction, etc." (Punekar et al., 1988:292). The current state of industrial relations in India reflects the response of the system to the changing social, economic, and political conditions. While the basic content of the industrial relations policy has remained unaltered, the emphasis has changed from one aspect to another in the context of contemporary problems. The Indian industrial relations scene is characterized by inherently weak and fragmented trade unions, authoritative or "paternalistic" management, and dominant government guided by the ideology of the "welfare State". Economic development has brought about changes in the attitudes and aspirations of workers. Workers today are well-trained, more enlightened, and more classconscious. However, they are not strong enough to provide leadership and develop truly representative unions. (White collar unions have succeeded to a certain extent, in providing internal leadership.) Inter-union rivalries and violence are on the increase. The attitudes and role of employers are also changing with economic development. Through increased contact with foreignownership firms and the spread of modern management style, employers especially in new industries like chemicals, engineering, auto-repair, and aluminum - have made attempts to develop human resource policies seeking cooperation of workers and recognizing their dignity. The role of government is expanding as a lawmaker, custodian of social interest, and as an employer. The review of recent changes in the legal framework shows current trends in industrial relations policy. The Industrial Dispute Act was substantially amended in 1982 and 1984. These amendments expanded the scope and coverage of the act significantly by redefining the terms "industry" and "workman". The act also extended the provisions relating to layoff and retrenchment which were applicable to businesses of 300 workers and now covered businesses of 100 or more employees. The amendments also made an attempt to reduce the procedural delays in the settlement of disputes by fixing the time limit to tribunals and labor courts for submission of awards.

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In addition to these amendemnts, a bill having far-reaching consequences for industrial relations was introduced by the government in Rajya Sabha in May 1988. The bill, known as "The Trade Unions and Industrial Disputes (Amendment) Bill", seeks amendments in both the Trade Unions Act and the Industrial Disputes Act. The bill severly restricts the rights of workers, expands the role of government and is pro-employer. It has met with strong opposition from the trade unions and as a result, it was not introduced into the parliament. The discussion of some of the highlights of the bill, however, is appropriate as it shows the direction in which industrial relations policy is moving. The bill proposes an increase in the minimum membership for registration of trade unions (from 7 members to a fixed 10 percent). The bill introduces the resolution of a new kind of dispute called "trade union dispute" between members of a registered trade union or between trade unions regarding the administration or management matters of a registered trade union. Trade unions fear that this will simply increase inter-union rivalries and continuous litigation. The bill also proposes the establishment of Bargaining Councils. One of the weaknesses of the Indian industrial relations system is the absence of statutory recognition of trade unions at the national level. To address this issue, the bill provides for legally recognized collective bargining for a unit or for an industry. If there is more than one registered trade union, all the unions will be represented in proportion to their relative strength on the bargaining council. Thus, the bill discourages the concept of one union - one industry. Also, the strength of the majority union may be destroyed by the representation of management- sponsored small unions. Regarding the procedure for lock-outs, according to the current provisions, an advance notice of 14 days is required. However, the bill provides for "immediate lock-out" without notice in case of imminent threat of violence or damage to property. The setting up of the Industrial Relations Commission (IRC) is also proposed by the bill. However, government retains the power to nominate the judicial or technical members of the IRC. The provision that government can intervene or sit as a judge in inter-union and intra-union conflicts poses a threat to the freedom of association of workers. Government plays a dual role - as a lawmaker, it can change the legal framework and as an employer, it is a party in the industrial relations system. Trade unions look towards government as a model employer and expect protection and suitable legislation. However, the bill has disappointed the trade unions. It is strongly protested as it contains anti-labor elements and discourages collective bargaining.

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References Giri, V. V. (1972) Labour Problems in Indian Industry. Bombay: Asia Publishing House. Government of India (1951) The First Five Year Plan. New Delhi: Government of India. Government of India (1956) The Second Five Year Plan. New Delhi: Government of India. Government of India (1961) The Third Five Year Plan. New Delhi: Government of India. Government of India (1968) The Fourth Five Year Plan. New Delhi: Government of India. Government of India (1969) Report of the National Commission on Labour. New Delhi: Government of India. Government of India (1973) Draft Fifth Five Year Plan. Vol. I and II. New Delhi: Government of India. Government of India (1976) Fifth Five Year Plan (1974-1979). New Delhi: Government of India. Government of India (1980) Sixth Five Year Plan (1980-1988). New Delhi: Government of India. Government of India, Ministry of Finance (1988) Economic Survey - 1987-1988. New Delhi: Government of India. International Labour Organization (1959) Report of the Government of India on Labour-Management Relations and Some Aspects of Wage Policy (Labour-Management Series No. 25). Geneva: International Labour Organization. Mamoria, C. B. and S. Mamona (1987) Dynamics of Industrial Relations in India. Bombay: Himalaya Publishing House. Misra, S. K. and V. K. Puri (1989) Indian Economy. Bombay: Himalaya Publishing House. Punekar, S. D., S. B. Deodhar and S. Sankaran (1988) Labour Welfare, Trade Unionism and Industrial Relations. Bombay: Himalaya Publishing House. Ramaswamy, E. A. (ed.) (1981) Industrial Relations in India. Delhi: McMillan Co. of India Ltd.. Sarma, A. M. (1984) Industrial Relations - Conceptual and Legal Framework. Bombay: Himalaya Publishing House.

Israel Amira Galin

The pattern of labor relations in Israel, which may be said to have emerged during the early 1920s, was designed and developed according to the social, national, and historical aspirations of the country's founders. The dream was to create a new way of life for the Jewish people in Israel - an egalitarian, classless society based on hard work, democratic principles, and an old-new Hebrew culture. The conditions prevailing in the country during the early 1920s made the realization of the dream almost impossible. The country suffered from primitive agriculture, almost no industry, small and limited markets, a lack of investment capital, a dearth of trained professional manpower, and political instability. Nevertheless, the organizational framework for labor relations had to be tailored to maintain the dream. The result was the establishment of socioeconomic and organizational institutions different in nature from institutions existing elsewhere. They were different because their objective was to create a new way of life as well as to meet current needs. Among these institutions were the agricultural settlements that became known as the Kibbutz and Moshav, and the Histadruth (the Israeli Federation of Labor), which from its very beginning was intended to be not only a trade union in the usual sense of the term, but also to serve as the means of coping with health, immigration, education, and economic problems. Part of the dream was realized with the establishment of the State of Israel on 14 May 1948. The newly formed State faced serious defence and economic problems as well as the task of coping with mass immigration. Pragmatism pushed ideology aside in the resolving of practical issues, while pressure from interest groups replaced ideology in decision making. Moreover, immediately after the establishment of the State a tremendous stream of Jewish immigrants, mostly survivors of the Nazi holocaust and refugees from the Islamic countries, completely changed the composition of the country's population. Most of the immigrants came from traditional societies, their education and technical knowledge was of a very low level, and they arrived with little or no material capital. Nevertheless, the basic institutions already existed and were able to absorb them. Most of the newcomers joined the work force and the Histadruth soon after arrival. From these meagre beginnings, Israel is now, at the beginning of the 1990s a modern, industrial welfare State and the only democracy in the Middle East. The

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small population of roughly four million, despite being faced with periodic wars and the threat of war, not to speak of other national crises, has become an informal, technological society, in which strong emphasis is placed on science and education. Industry is constantly growing in scale and sophistication, and so are public and community services. The civilian work force, estimated at approximately one and a half million, is composed of about 40 percent women and 60 percent men. They are employed mainly in public services (about 30 percent) and industry (about 23 percent), and only about 6 percent are employed in the country's very advanced agriculture (Central Bureau of Statistics, 1987). The standard of living is relatively high and has been rising constantly since the establishment of the state. However, apparently due to rapid change, constant stress, and diminishing consensus in what has come to be a highly pluralistic society, conflict has turned out to be a focal feature of life in Israel. The high rate of labor disputes, especially in the public sector, is only one aspect, albeit an important one, of conflict relations in Israeli society. Labor laws in Israel have been developed over the years to resolve both individual and collective labor problems (Ben Israel, 1980). Personal labor relations are resolved by a substantial body of legislation which includes laws governing sick pay, annual leave, the employment of women, the employment of male and female workers (equal pay, equal retirement age), wage protection, severance pay, hours of work and rest, equal employment opportunities, and minimum wages. An important new law, relating to the personal employment contract, is now being prepared. Relations between employee and employer organizations, including collective agreements, strikes and lockouts, and thirdparty intervention, are determined by the Collective Agreement Law, the Settlement of Labor Dispute Law, and to a certain extent also by the Labor Courts Law. The contract laws in Israel are also relevant to labor relations, especially where there is no relevant special provision for the matter in question in laws regulating labor relations. For example, the obligation, in the Israeli contract laws, to negotiate in good faith has been extended to negotiating collective agreements in labor relations. It is noteworthy, however, that the majority of both individual and collective rights and obligations of parties to labor relations is determined by collective agreements and collective arrangements. These collective agreements and arrangements can only add to the provisions of Israeli laws and can in no way lessen them. Extension orders, issued by the Minister of Labor, also enlarge the scope of collective agreements far beyond the narrow scope of the original bargaining unit. By virtue of an extension order, rights and obligations included in a specific agreement can be imposed upon workers and employers who took no part in the negotiations of the agreement and never approved its terms.

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The Parties to Israeli Industrial Relations The Unique Character of the Histadruth There is no way to understand the Histadruth (Israeli Federation of Labor) of today - its structure, its problems, and its influence - without referring to its history. The Histadruth is not, and never has been, a trade union in the traditional sense. Unlike most trade unions in the world, the Histadruth was not established to protect exploited workers. The Histadruth was created in the early 1920s for the purpose of developing a Jewish working class in Israel in accordance with the Zionist dream, and it was this dream that determined to a great extent the Histadruth structure. The Histadruth's full title "The General Federation of Labor in Israel", indicates one of its most important features. Since the Histadruth founders aspired to establish a new working society in Israel, they were obliged to offer membership to almost anyone who wished to contribute to the cause. Thus, almost any adult citizen who wishes to join the Histadruth is accepted as a member, including members of the free professions, employers, and housewives. This gave rise to a very broad organizational structure - covering more than 40 Histadruth national unions, including the National unions of Agricultural Workers, Clerical, Administrative and Public Service Employees, Diamond Workers, Engineers, Foodworkers, Government Employees, Workers in the Metal Industries and Electrical and Electronics Industries, Nurses, Textile Workers, Teachers, Pharmacists, Watchmen, Seamen, Periodical Editors, and so on. All these unions operate, at least formally, under the centralized authority of the Histadruth and are bound to accept its decisions. More than 50 percent of the Israeli population is organized within the Histadruth's centralized framework, which gives the Histadruth an especially powerful status in the country's industrial relations. Another unique feature of the Histadruth is its considerable economic activities. Hevrat Ovdim, the holding company of the Histadruth's economic activities was also established in the early 1920s, to cope with problems of the time. There were no ways for Jewish workers in those days to compete with the cheap Arab labor, and there was virtually no possibility for them to maintain a reasonable standard of medical services. Hevrat Ovdim established plants and cooperatives to provide work to Histadruth members, while Kupat Holim, the health insurance service, provided complete medical care. All Histadruth members are members of both the Hevrat Ovdim holding company, which over the years has been responsible for about 20 percent of the national product, and Kupat Holim, which has become the most important health insurance service in Israel.

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While it is true that the Histadruth, as a highly centralized organization which represents most of organized labor in Israel, is a powerful institution, certain growing endemic problems serve to reduce its bargaining power. The Histadruth's industrial structure has given rise to a heterogeneity and severe internal conflicting interests that are difficult to handle. There are conflicts between professional unions and "blue-collar" unions, among the various industrial unions, and between academic and non-academic unions. These together with the bitter conflicts between the institution's own industries and their trade unions (also Histadruth members) diminish the status of the Histadruth as a trade union in the eyes of the workers, undermine its control over the various trade unions, and reduce its bargaining power.

The Israeli Employers The Israeli employers are divided among three sectors: the public sector, the private sector, and the Histadruth sector. The Histadruth sector comprises the cooperatives, concerns, and enterprises of the Histadruth holding company Hevrat Ovdim. It is noteworthy that while formally all the Histadruth's economic activity falls under the roof of Hevrat Ovdim, in practice it has direct control over only a part. For example, most of the agricultural settlements (Kibutzim and Moshavim) formally belong to Hevrat Ovdim. In practice, however, the holding company is unable to exercise an employer's authority over these settlements. Under the Histadruth constitution, Hevrat Ovdim as an employer is prevented from negotiating conditions of employment with its own trade unions. The result is that both wages and working conditions in the Histadruth sector, though determined by the Histadruth itself, are largely influenced by those negotiated in the private and the public sectors. For ideological and other reasons, Hevrat Ovdim has not established any formal coordination with the employers in the other sectors. Informally, however, such coordination does exist to various degrees, especially regarding bargaining over general collective agreements which are extended, by virtue of extension orders, to the Histadruth sector. The private sector includes several employers' associations such as: the Manufacturers' Association (which covers most branches of manufacturing industry), The Artisans' Association (which covers the small handicrafts industry), the Chamber of Commerce, the Farmers' Association, The Constructors' and Builders' Association, The Hotel Owners' Association, The Diamond Manufacturers' Association (Shirom, 1984). All these associations are members of the Coordinating Bureau of Economic Organizations - the private sector federation of employers' associations. The Coordinating Bureau, in contrast to its counterpart, the Histadruth (which has formal authority over its trade unions) does not have formal authority over its member associations. The most

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important and influential private association, and the leader of the Coordinating Bureau, is the Manufacturers' Association. The president of the Manufacturers' Association has always been the president of the Coordinating Bureau and the policy of the Coordinating Bureau has always been largely determined by that of the Association. A considerable part of the bargaining and lobbying efforts of the Manufacturers' Association (and therefore also of the Coordinating Bureau) are directed towards the Israeli government, which is expected to ensure an acceptable wage policy, to adjust various taxes, and to put pressure on the Histadruth to make appropriate concessions. The public sector includes the civil service, government enterprises, independent authorities (such as the broadcasting authority), municipalities and local authorities, state-owned enterprises, as well as other public agencies (such as the Jewish Agency). Apart from government services, the government employer dominates all essential public utilities such as electricity and water. The Civil Service Commission, together with officials from the Ministry of Finance, represents the government as employer in the civil service. The Union of Local Authorities is the coordinating body for the local authorities and the representative of most municipalities and local authorities in industrial relations issues. However, the union's framework is less rigid than that of the Civil Service Commission, enabling the local authorities to exercise a degree of autonomy. State-owned enterprises are relatively autonomous in industrial relations issues, the supervision of the Authority of Government Enterprises notwithstanding.

Government Intervention The Israeli government intervenes in industrial relations in several ways. Apart from its fiscal and monetary policy, which affects both employers and employees, the government is responsible for most labor legislation and supervises the compliance of the parties with labor laws. It also provides for conciliation and arbitration to prevent and settle labor disputes, regulates the labor market by means of extension orders, provides an employment service, and ensures social security. Government initiative in labor legislation has increased since the beginning of the 1980s, especially regarding the protection of individual rights. Thus, a minimum wage law and new laws on equal opportunities in employment and in retirement have been legislated. The personal employment contract law, presently under consideration, may bring about a radical change in prevailing concepts and behaviors regarding individual rights in the Israeli system of labor relations. The Department of Labor Relations in the Ministry of Labor and Social Affairs, headed by the Chief Labor Relations Commissioner, provides concilia-

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tion, mediation and arbitration services, as well as registering collective agreements. The Employment Service, which operates throughout the country, provides work to the unemployed whose numbers have increased from an average of 3 percent in the 1970s to about 6 percent in the mid-1980s, while the National Insurance Institute provides unemployment compensation to the unemployed, based upon their pre-unemployment salaries (Central Bureau of Statistics, 1987). The extension orders, issued by the Minister of Labor, ensure uniformity of conditions for organized and unorganized workers within the same sector. They also enable the government to regulate the labor market and to exercise a measure of restraint on competition between organized and non-organized sections of the economy.

The Nature of the Labor Relations Process Collective Bargaining in Action There is hardly any legislation in Israel to regulate collective bargaining. The parties to industrial relations are under no legal obligation even in terms of bargaining over wages and working conditions. In the absence of clear legislation, collective bargaining procedures have developed in Israel according to custom, prevailing practices, or procedures defined in collective agreements. Each of the three sectors of the Israeli economy, therefore, has its own unique character of collective bargaining. Public sector collective bargaining. While the question of collective bargaining rights of public sector employees has been a debated issue in many countries, collective bargaining in the public sector in Israel has always been an accepted procedure. The most important bargaining unit in the Israeli public sector is undoubtedly the civil service unit, which includes all government services under the direct control of the Civil Service Commission (in 1988, approximately 50,000 employees). Collective bargaining in this unit is highly centralized, supposedly to protect against whipsawing, and to eliminate costly repeated negotiations in each subunit. Salaries in this unit are negotiated officially between the Histadruth and the Civil Service Commission. However, in practice, since 1977, government wage policy concerning its own employees is determined by the Committee of Ministers for Economic Affairs, headed by the Minister of Finance. Usually the Civil Service Commissioner participates in the meetings of this committee and, together with the official in charge of wages and salaries at the Ministry of Finance, negotiates with the Histadruth. However, in some cases, the Committee of Ministers circumvents the formal negotiating

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team and negotiates directly with the Histadruth officials. Other government officials, their positions notwithstanding, are not authorized to negotiate. Even general managers of government ministries are not authorized to negotiate with their own employees. Since all bargaining powers are vested in a small group of top-level politicians and officials, managers in government ministries may influence collective bargaining only by political manipulations, but not directly. The Histadruth's centralized structure also contributes to the high centralization of bargaining in the government employees' sector. Only high-level Histadruth officials participate in the bargaining process, including the Histadruth Secretary General, the head of the Histadruth Trade Union Department, the head of the Civil Servants Union, and heads of other unions representing public sector employees (such as the head of the Union of Clerical, Administrative and Public Service Employees and heads of the Unions of Engineers, Technicians, Graduates in the Social-Sciences and Humanities - all of which are part of the Histadruth). However, the centralized structure does not prevent differences between the trade union leaders from coming to the fore during every collective bargaining process in the public sector. The conflicts within the Histadruth stem from the different aims of the individual public sector unions, mainly between the professional unions (engineers, technicians, etc.) and other public sector unions. The professional unions often push for high wage increases which are bound to create a substantial gap between professionals and all other workers in the public sector, while other unions struggle to ensure subsistence for employees who hardly reach the legal minimum wage. The centralization of the structure is further compounded by the official, uniform pay scale for government employees (Dubin and Aharoni, 1981). An important characteristic of this uniform pay scale is the so called "linkage" mechanism (the nurses pay rate, for example, is linked to that of the physicians, whose pay rate is linked in turn to that of the engineers, and so on). The linkage mechanism was meant to prevent any public sector union from gaining special pay benefits in excess of those gained by any other union, by ensuring that success of any union in increasing its pay rate would result in automatic upward adjustments for all linked unions. However, while the linkage mechanism does not prevent any specific union from demanding and gaining special gains, it does cause a high level of inflexibility of the bargaining process. This inflexibility proves costly to the Israeli government and the public, as it results in a very high rate of strikes in essential services which are concentrated in this sector (Galin, 1987). Private sector collective bargaining. The employers' organizations representing the private sector also adopt a common centralized stand in their bargaining with the Histadruth. For the purpose of negotiations at the national level, they are organized into the Coordinating Bureau of the Economic Organizations,

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which usually presents centralized policy at the bargaining table. The interest of the private employers in centralization stems from a number of considerations. •

•

•

•

The centralized bargaining is meant to contribute to easing the pressures on management at the plant level for increased wages and salaries, and improved working conditions. At the industry level, separate bargaining may cause profitable industries to face pressure for high increases, while the weaker industries may be forced to offer lower increases, and even these may be beyond their ability. The centralized bargaining is conducted according to the means of the weakest industry and thus eases the pressure on both profitable and weak industries. As the linkage system has also stretched to the private sector, raising salaries in one industry often invites similar raises in other industries. Thus, over a short period of time the level of demands for increases in weaker industries may reach that of the most profitable ones. Centralized bargaining is expected to prevent or at least to minimize the possible effects of this process. Selective industrial wage rates could lead to undesired interindustry mobility and shortage of manpower in certain industries. Out of concern, therefore, for possibilities of internal strife, the employers' organizations are interested in unified conditions reached by a centralized bargaining procedure. However, since the bureau itself is a heterogeneous federation, preserving solidarity among the member associations is a problematic issue. In fact, member associations have even been known to refuse to sign collective agreements negotiated by the bureau.

It is accepted that within the limits of the centralized agreement there is room for industrial and plant-level bargaining and agreements, provided bargaining demands do not exceed the terms of the centralized agreement. In practice, however, all too often plant-level demands and agreements exceed the centralized agreement, indicating effectively a relatively high level of bargaining decentralization, despite the formal centralization. Private-sector collective bargaining has great importance in Israel, since, at times, the resulting leading collective agreements become subject to extension orders. These extension orders, especially with respect to COLA (Cost of Living Allowance) agreements, spread the effect of the private sector agreements throughout the whole Israeli economy (Galin, 1977). Histadruth-sector collective bargaining. In contrast to the government and private sectors, there is no centralized bargaining in the Histadruth sector. Theoretically, as the Histadruth's economic activity (under the roof of Hevrat Ovdim) is owned by all Histadruth members, and due to the identity between the trade union component and the economic component at the higher echelons of the Histadruth, there is no sense in collective bargaining within the Histadruth economy. This is the reason for the proscribing of collective bargaining in the

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Histadruth constitution. Practically, however, there is a natural conflict of interests between the trade union activities and the economic activities, resulting in frequent bargaining at the individual plant level. This conflict of interests has intensified over the years, with the decline of the founding fathers' ideology, and has become a source of weakness and embarrassment for the Histadruth. Some general observations regarding collective bargaining. It is generally accepted that the first stage in collective bargaining is nationwide. It takes place every two years and results in centralized agreements for the public and the private sectors, and sometimes for the whole economy in the form of a "framework agreement" and even a "package deal" which includes wages, prices and taxes. Typically bargaining over COLA (Cost of Living Allowances) are conducted formally between the Coordinating Bureau of the Economic Organizations and the Histadruth, but, in practice, not without the approval of both the employers of the public sector and the Histadruth economy. Once a COLA agreement is reached, extension orders are issued for the whole economy, including the non-organized workers. Practically, however, these centralized arrangements do not always satisfy local union officials or shop stewards, who demand and often gain more, often by means of strikes. Naturally, the more centralized the bargaining structure, the less the attention given to the needs and interests of the various subunits, and this results in higher strike activity. It is also noteworthy that between 1976 and 1987 the COLA, on average, accounted for 60 percent of wage increases in Israel; other nationwide agreements accounted for only 15 percent, while local and individual plant agreements accounted for 25 percent, on average, of the wage increases (Grinshpan, 1988). If we exclude COLA bargaining, as it deals only with the preservation of real wages, and not with wage increases, we may conclude that, practically, a great deal of the bargaining on wage increases is decentralized.

The Pattern of Strike Activity High strike record in the civil service. The most notable feature of strike activity in Israel is the high strike activity in the public sector. While the employees in the public sector constitute about 25 percent of the labor force over the years 1976-1986, the public sector accounted for more than 40 percent of strike activity in Israel; the number of strikers in the public sector accounted on average for more than 60 percent of the Israeli strikers; and working days lost due to strikes in the public sector accounted, during these ten years, on average, for more than 50 percent of the working days lost due to strikes in Israel (Bar-Zuri and Bazri, 1988:34). These statistics are not characteristic of recent years only, they are typical also of previous periods. The greatest contributor to

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this notorious record of strikes in the public sector is the civil service, which employs a mere 12 percent of the employees in this sector and is responsible for most of the essential services in the country. The fact that there are so many strikes in the civil service needs explanation, especially since Israeli law, which recognizes the right to strike and even grants various kinds of immunity for strikes and strikers, defines the concept of an unprotected strike in the public sector. In the Settlement of Labor Disputes Law, 5717-1957, Part Four of the Collective Agreements in the Public Service, all immunities granted to strikes in other laws are removed for an unprotected strike in the public service. Despite this special concern of the legislature, and despite the establishment of the Tribunal of Voluntary Arbitration in the public sector, the record of strikes in the civil service is still, as it always has been, the highest in the Israeli economy. One possible explanation for this high record of strikes in the civil service is the highly inflexible bargaining structure of this bargaining unit. This inflexibility, which, as noted above, is intended to protect against whipsawing and to eliminate costly repeated negotiations, results in fact in ignoring the needs of special groups and resists making essential bargaining concessions, all for the sake of uniformity. Some research findings on the Israeli public sector (Galin, 1987; Bar-Zuri and Bazri, 1988) suggest that many bitter strikes, which, due to the inflexibility, are also hard to terminate, are the inevitable consequence of the public sector bargaining structure. The impact of economic instability and high inflation on strike activity. Table 1 presents the record of strike activity in Israel for ten years (1976-1985), as well as yearly averages for two periods: 1967-1975 and 1976-1985. Each of the three measures of strike activity - strike frequency (number of strikes per year per 100,000 employed), strike breadth (number of strikers per year per 1,000 persons employed) and strike volume (number of working days lost per year per 1,000 persons employed) - represents a different aspect of Israeli strike activity. Generally, the first of these measures, the strike frequency, represents the decision to strike, while the other two, strike breadth and strike volume, represent the severity of the strike activity. Comparison between the averages of the three strike measures for the two periods reveals a small decrease in the strike frequency (about 25 percent) in the second period (1976-1985), and a most significant increase (more than threefold) in both strike breadth and volume. One possible explanation is the high level of economic instability and the abnormally high rates of inflation in the second period. It is noteworthy that in Israel the increase in the inflation rate has been nonsequential. In the early 1970s the average annual rate of increase of the consumer price index (CPI) was 6 to 8 percent. By the mid-1970s the CPI average annual increase was already about 39 percent. In 1979 it exceeded 100 percent and it reached its peak in 1984 when a high of 445 percent was recorded. As a result of the new economic program of

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Table 1: Measures of strike activity in Israel Yearly strike average

Average strike volume

Average strike breadth

Average strike frequency

1967-1975 1976-1985

238.5 943.2

92.8 330.8

15.9 11.3

Year

Strike volume

Strike breadth

Strike Frequency

1984 1985 1986

927.2 499.8 374.5

492.2 438.4 198.4

13.9 12.1 13.1

Source: Bar-Zuri and Bazri (1987: 34, 1988: 32) Volume = number of working days lost per 1000 employees. Breadth = number of strikers per 1000 persons employed. Frequency = number of strikes per 100,000 employees.

July 1985, which reduced the inflation rate dramatically, starting from the second half of 1985, the CPI in 1986 fell to 19.7 percent and in 1987 to 16.1 percent. The strike activity record seems to correspond to the inflation record, but only in regard to strike severity (breadth and volume). Strike frequency, so it seems, was not affected by the inflation rate. Nevertheless, strike breadth and volume certainly tripled in the period of high inflation, and tended to decrease during the period of reduced inflation, from mid-1985 (see Table 1). It is noteworthy that COLA agreements, which are intended to minimize fluctuations in real income under high inflation rate, do not counterbalance the effects of inflation on strike activity in Israel, possibly due to the fact that the COLA provides only partial indexation and thus does not always prevent erosion of wages in real terms. Causes of strikes. Most strikes and days lost due to strikes in Israel are caused by disputes over wages and other work compensations. During the years 1976-1985 a yearly average of 44 percent of the strikes and 72 percent of the work days lost were due to disputes over wages (see Table 2). The number of strikes and lockouts over wages in recent years has been as high as 65 percent (in 1982) of all strikes and lockouts in the economy, and up to 95 percent of all work days lost (in 1984).

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Table 2: Strikes and work days lost in Israel, by causes yearly averages for 1976 — 1985, in percentages Causes

Work Days Lost

Strikes and Lockouts

Wate rates and other payments Work agreements broken Withholding of wages Dismissals of workers Other causes

72 3 9 5 11

44 9 17 12 18

Source: Statistical Abstract of Israel, Vol. 2 7 - 3 6 (1976-1986), Central Bureau of Statistics, Jersusalem, 336-337, 340-341, 346-349, 368-369, 378-381, 386-387, 4 0 1 - 4 0 2 .

Collective Agreements Each year hundreds of collective agreements are signed in Israel. Both legally and practically, these collective agreements constitute a network of rules which governs the relationship between the employers' organizations and the employees' organizations at the national and the industrial level, and between specific employers and their employees at the plant level (Ben Israel, 1976). Out of the various components of the collective agreement, the terms of employment, such as working procedures, wages, sick leave with pay, working hours, overtime and vacations, become part of the individual employment contract, and have an effect even after the expiration of the collective agreement. It is noteworthy that in accordance with the Collective Agreement Law, 5717-1957, participation in a strike (with the exception of unprotected strikes) is not regarded as breach of the personal obligations in the employment contract. According to the Collective Agreements Law, there are two categories of collective agreements in Israel - a general collective agreement and a special one. The general collective agreement is between the representative employee organization and an employer organization and may be nationwide or at the industrial level. The special collective agreement is for a single plant, organization, or subunit, and is between the employer or the employer organization and the representative employee organization of the employees involved in the agreement. A representative employee organization for the purpose of a special collective agreement is the employee organization representing the greatest number of organized employees involved in the agreement, on condition that this number is not less than the one-third of the total organized employees. A representative employee organization for the purpose of a general collective agreement is the employee organization comprising the greatest number of organized employees involved in the bargaining.

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These general definitions of a representative employee organization, instead of a clearly defined trade union, result from the unique structure of the Histadruth. The general definitions, moreover, present several practical problems relating to the specific identity of the authorized party to the agreement, as two or more bodies (often competing bodies within the Histadruth) can claim to be the representative organization. A collective agreement may be valid for a specific period, if the parties to the agreement have so decided. It can also be valid indefinitely, or partly valid for a specific period and partly for an indefinite period. If a party to an agreement for a specific period desires to terminate the agreement at the time specified in the agreement, it must notify the other side two months before the expiration date of the agreement. In cases where the period of validity has expired and neither of the parties has given notice of termination to the other, the agreement continues to be in force as an agreement for an indefinite period. Either party to a collective agreement with an indefinite validity period can terminate the agreement by giving the other party notice of its wish not less than two months before the desired date of termination, provided that the agreement has already been in force no less than one year. Most collective agreements in Israel are signed for an indefinite period, and most of them are concerned with specific additions to an existing indefinite agreement or agreements. Thus, for example, the five-day work week is the only subject of several recent collective agreements, and this is in fact no more than an addition to previous satisfactory indefinite agreements between the same parties. Theoretically it is accepted that during the lifetime of a collective agreement a strike should not be launched. New conflict of interest should be delayed until the expiry date of the agreement, and disputes over rights should be settled within the labor courts. Practically, however, as most of the agreements are for an indefinite period, most strikes take place during the lifetime of collective agreements. Possibly because the parties to the agreements are reluctant to terminate the agreement, as they are afraid to lose existing achievements.

Third-party Intervention The Form of Third-party Intervention The form of third-party intervention is greatly influenced in most countries by the basic conception of the dispute phenomenon. In Israel, the somewhat theoretical distinction between "interest" (economic) dispute, and "judicial" (right) dispute during the lifetime of an agreement is supposed to prescribe the appropriate form of intervention. An "interest" dispute should be referred to

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mediation or arbitration, while a "judicial" dispute should be referred to the labor courts for resolution. However, a clearcut distinction between an "interest" dispute and "judicial" dispute exists in Israel only in theory. Rapid changes in the Israeli economy and technology bring about many disputes over new interests throughout the duration of collective agreements. Such disputes cannot be resolved by the labor courts because they are not judicial in nature, and are therefore referred to mediation and voluntary interest arbitration.

Mediation The Settlement of Labor Dispute Law, 5717-1957, actually provides for compulsory mediation in Israel. According to this law the parties to a collective dispute must attend mediation sessions once the Commissioner of Labor Relations has decided to intervene. The law facilitates the early intervention of the mediation service by calling the parties to notify the commissioner of a dispute 15 days before any industrial action is taken. During this 15-day period the mediator has considerable authority. He can compel attendance at a meeting, collect evidence, interrogate the parties, order them to produce information, and even fine them for failing to comply with his directives. He cannot, however, compel the parties to reach a settlement. His substantive suggestions are merely recommendations and he cannot impose them. Even though the law gives the mediator considerable powers, he seldom needs to invoke them because both he and the parties gain from his not doing so. In almost all disputes the parties are willing to meet and attempt to reach an agreement knowing that they cannot be forced to agree. The parties can therefore only gain from mediation. It enables them to resume their negotiations and possibly reach a settlement as well as maintain a good public image. Because the mediator's success in securing an agreement depends largely on the goodwill of the parties, he seeks to obtain their cooperation rather than risk offending them by ordering them to act. The mediator's authority appears to have been granted with the objective of enhancing his status and not because he needs such authority to function. Some research findings regarding the Israeli mediation service reveal a number of interesting features of this service (Galin and Krislov, 1979). Apparently, mediation in Israel is more effective in preventing strikes than in settling disputes after a strike has been launched. A "cooling-off' period of 15 days is too short to enable the parties involved in the mediation process to reach a final agreement. This is very likely the reason why most mediations in Israel end without an agreement being reached between the opponent parties. An extended mediation period was found to enhance the probability of an agreement. It is noteworthy that the parties to labor disputes in Israel are quite

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satisfied with the mediation process despite the fact that often no agreement is reached during the mediation proceedings. Apparently, while the parties do not expect mediation to result in an agreement in every instance, they do enjoy certain intangible benefits from the mediation process, such as the fostering of more rational actions, which pave the way for a voluntary settlement once the mediator has withdrawn.

Voluntary Interest Arbitration Voluntary interest arbitration (VIA), in contrast to compulsory arbitration, is compatible with collective bargaining. In Israel, the parties to a labor dispute are free to decide whether they want arbitration as a resolution technique for an interest dispute. The parties can accept arbitration either by prior agreement or on an ad hoc basis. The arbitrator is chosen by agreement between the parties themselves. Usually the arbitration award is final and can be legally enforced on each party. However, should both parties agree to reject the award, it will not be enforced. The parties can seek the help of private arbitrators (a single arbitrator or a panel of two or three), public figures, Histadruth leaders, retired judges, and distinguished lawyers. The parties may also ask the Chief Commissioner of Labor Relations and his staff, who regularly provide mediation services, to arbitrate. The chief commissioner and his staff are government employees and serve as arbitrators as part of their job. In the public sector the Tribunal of Voluntary Arbitration (TVA) is supposed to arbitrate between the parties. The TVA was established in 1977 by the Histadruth and the Israeli government to reduce the high number of labor disputes as well as to avoid the need for compulsory arbitration legislation. A distinguished retired supreme court judge was appointed as head of the TVA and expectations rose high. However, the public sector, even though it is responsible for the high rate of disputes in the Israeli economy, has made relatively little use of the tribunal. It has been argued that the tribunal has failed to establish itself as a central institution for resolving public sector disputes because of the reluctance of the parties to accept the provision of strike prohibition included in the collective agreement that established the tribunal. It has also been argued that neither labor nor management in the public sector view the tribunal arbitration procedure as a substitute for strikes, but rather as an additional tool for conflict resolution. As a result, strong unions prefer the strike option. Only weak unions resort to the arbitration option in the Israeli public sector (Galin, 1986). Although interest arbitration in Israel can cover a variety of issues, in a typical VIA the parties submit only one issue for arbitration, usually the most important one or the one hardest to agree upon. The most common issues submitted to arbitration are wages and salaries, terms of employment, and fringe benefits. In

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some countries interest arbitration is mainly considered a replacement for interest bargaining, and, therefore, all issues between the parties covered by the contract may be submitted to arbitration. In Israel, VIA is considered a method for resolving differences on one or more specific issues and also a method of putting pressure on the other side. It should be noted that a voluntarily arbitrated award in Israel is considered a contract with a fixed duration, typically one year.

Labor Courts The Israeli Labor Courts were established by the Labor Courts Law, 5729-1969, with exclusive jurisdiction in both individual and collective disputes over rights. The Labor Courts are part of the judiciary and have two levels of adjudication. The regional labor courts have jurisdiction over disputes between parties to a local (in most cases, plant level) collective agreement. The National Labor Court has appellate jurisdiction over Regional Labor Court decisions, as well as original jurisdiction over disputes arising out of general, that is either industrylevel or national-level, collective agreements. A claim concerning a collective labor dispute may be submitted to the appropriate court by either of the parties to a collective agreement. The law empowers the labor courts to grant temporary relief or issue injunctions prohibiting any industrial action which is in violation of a collective agreement. Civil cases in regional labor courts are heard by a bench of three, composed of a presiding professional judge and two associate members, one representing employers, the other representing employees. They are appointed by the Ministers of Justice and Labor for a three-year term after consultation with either the Histadruth or the Manufacturers' Association. Some authorities maintain that this tripartite composition has enhanced the acceptability of the courts to the parties. Since their establishment, the labor courts have been handling a growing number of collective labor disputes, and at the same time the number of strikes resulting from such disputes has been on the decrease. The range of issues dealt with by adjudication has increased, and the litigation process has been relatively efficient in terms of time consumption. While compliance with injunctions issued by the courts has been problematic, the courts follow a policy of encouraging the parties to reach a compromise settlement rather than imposing a mandatory court ruling on them. Considering the dominance of the compromise as the major type of dispute settlement, it is evident that the judges have informally introduced considerable mediatory functions into the courts' judicial process. Thus the actual functions of the judges in the Israeli labor courts are very similar to the important mediatory functions exercised by the professional judges in the West German labor courts, despite the fact that the Israeli courts are under no statutory obligation to mediate a dispute.

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Current Trends in Israeli Industrial Relations The major trend which characterizes industrial relations in Israel in the early 1990s is an increase in the influence of the Israeli government on both employers' and employees' organizations. This trend is explainable by structural features of the Israeli industrial relations system and the continuing political and economic uncertainty. It seems that at times of uncertainty both labor and management learn that pressure on the government provides better "insurance" than reaching an "independent" agreement, as only the government can protect them against rapid and unexpected changes. Strikes in the public sector, and especially in essential services, are only one form of putting pressure on the government. Another form is intensive lobbying and negotiating by the parties to the dispute with government officials instead of bargaining with one another. Thus, by appealing to the government for protection, labor and management themselves call for growing government influences on intervention in industrial relations and collective agreements.

References Bar-Zuri, R. and T. Bazri (1987) "Strikes in Israel 1976-1985". Economy and Labor, No. 4, 32. (In Hebrew.) Bar-Zuri, R. and T. Bazri (1988) "Strikes in the Economy". Economy and Labor, No. 5, 34. (In Hebrew.) Ben Israel, R. (1976) A New Dimension in Collective Bargaining. Jerusalem: The Harry Sacher Institute For Legislative Research and Comparative Law. Ben Israel, R. (1980) "Israel". In R. Blanpain (ed.), International Encyclopedia for Labor Law and Industrial Relations. Deventer and Boston: Kluwer. [For a translation of the laws, see State of Israel, Ministry of Labor and Social Affairs (1987) Labor Laws. Jerusalem: State of Israel, Ministry of Labor and Social Affairs.] Central Bureau of Statistics. (1987) Labor Force Surveys 1985, Special Series No. 801. Jerusalem: Central Bureau of Statistics. Dubin, R. and Y. Aharoni (1981) "Ideology and Reality: Work and Pay in Israel". Industrial Relations, Vol. 20, 1, 18-35. Galin, A. (1977) "Wage Indexation and Industrial Relations in Israel". Labour and Society, Vol. 2, 3, 301-310. Galin, A. (1986) "The Performance of Voluntary Interest Arbitration: The Case of Israel". Journal of Collective Negotiations, Vol. 15, 4, 301-309. Galin, A. (1987) "Public Sector Bargaining Structure in Israel". Journal of Collective Negotiations, Vol. 16, 3, 201-207. Galin, A. and J. Krislov (1979) "Evaluating the Israeli Mediation Service". International Labour Review, Vol. 118, 4, 487-496.

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Grinshpan, S. (1988) "Development of Wages, Wage Policies and Their Implementation". Economy and Labor, No. 5, 18. (In Hebrew.) Shirom, R. (1984) "Employers Associations in Israel". In J. P. Windmuller and A. Gladstone (eds.), Employers Associations and Industrial Relations: A Comparative Study, 294-317. Oxford U.K.: Oxford University Press.

Italy Raoul C. D. Nacamulli

Introduction The Italian industrial relations system is currently undergoing transition. In the Fifties and Sixties, industrial relations only played a marginal role. During the fall of 1969, however, unions became a "strong action". The interdependence between the economic system on the one hand and the political system on the other hand increased significantly. Yet, at the beginning of the Eighties, the importance of unions started to dwindle again. This evolutionary process is analyzed in this chapter. In particular, the features of the "Italian system" are sketched. The dynamics of the Italian industrial relations system from the second part of the post-war period to the recent past are examined. The three "actors" in the industrial relations system are analyzed, i.e., trade unions, management, and the State. And, finally, the processes of industrial relations, i.e., bargaining structures, consensusbuilding processes, and negotiating issues, are explained and discussed.

Background Two structural factors are peculiar to the Italian economic system: the extremely high dependence on foreign countries and its north-south dualism. The former derives from the lack of raw materials and energy resources and the latter from the gap between the level of development in Northern and Central Italy (more developed) and in Southern Italy and on the islands (less developed). In addition, the chronic inefficiency of the State bureaucracy is a further hindrance to economic development. Yet, the State has a controlling interest in the enterprises (the so-called "imprese a partecipazione statale") that play the major role in a number of sectors, such as oil, iron and steel, and chemical. In 1988, the working population accounted for 23.9 million people out of a total population of 56.7 million (Table 1). The unemployment rate was 12 percent, but it amounted to 32.7 percent in the case of women, in Southern Italy (Table 2). The features of the average Italian unemployed are the following: she comes from the South, is a woman, and is young. Since 1988, unemployment

Raoul C. D. Nacamulli

206 Table 1: Italian population divided according to condition Condition

Males

Females

Total

Labor force

15,230

8,758

23,988

Employed Full-time Part-time Unemployed (all categories) Unemployed (out of work, but looking for a job) (looking for a job ~ for the first time) Out of work (as either housewives, students, or retired, etc., but who, when asked a second question, said to be looking for a job)

13,990 13,660 330 1,240 350 687 240

7,113 6,843 264 1,645 231 725 689

21,103 20,503 594 2,285 536 1,412 937

Out of labor force

12,406

20,369

32,775

5,994 162

13,093 530

19,087 692

5,832

12,563

18,395

6,411

7,275

13,686

27,635

29,127

56,762

People of working age (14 — 70 years old) People who said to be not looking for a job but to be willing to work under particular conditions People who said to be not looking for a job, not being in the position to work, or having no interest in working Population (outside 14 — 70) Total population Table 2: Specific unemployment

rates

(percentages) Females

Total

8.1 6.5

18.3 10.9

12.0 8.1

2.0 1.8 4.0 5.2 14.5 21.7 3.0 6.1 9.5 10.1 3.2

2.5 7.9 11.3 16.2 32.7 34.5 9.0 12.8 22.0 22.6 8.5

2.2 3.9 6.9 9.9 20.16 27.4 5.0 8.3 13.9 15.6 5.3

Males general condition unemployed, looking for a job for the first time unemployed other area North Center South Age 1 4 - 2 9 over 30 qualification — no qualification junior highschool highschool degree university degree Source: ISTAT, Labor force survey, 1989.

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has diminished in agriculture, in the industrial sector it remained unchanged, while in the service sector it increased slightly. From the beginning of the Eighties and on into the Nineties, the Italian economic situation has undergone positive advance, only affected by a period of recession as an aftermath of the second oil shock (September 1981 - May 1983). Nevertheless, the Italian economic evolution has been characterized by more or less the same external factors as all the other Western economies, such as unstable development of world trade and strong exchange rate fluctuations. Yet, it has also been affected by specific internal factors that, according to some, brought about the conditions for the "Italia boom" of the Eighties. One of these conditions was the forceful development of the so-called "third Italy", i.e., small and medium-sized enterprises systematically linked to one another on a territorial or production basis, which combined aggressive marketing policies, quality production, and a remarkable organizational and managerial flexibility. From the political point of view, Italy is a liberal democracy with a parliament made up of two chambers: a Chamber of Deputies, elected according to proportional representation, and a Senate, elected with a uninominal system. The President of the Republic is appointed by an enlarged parliament of three representatives for each region. The President of the Council and the Government need to obtain parliament's vote of confidence and are then appointed by the President of the Republic. Since World War II, the Italian government has been composed of coalitions that have been characterized by "imperfect bipartisonism". The bipartisonism has indeed been imperfect because there has never been alternation in the rule of the Country between the two Italian major parties - the Christian Democratic and the Communist Party (as from 1991, Partito Democratico della Sinistra - Left Democratic Party). The Communists have always been in opposition, whereas the Christian Democrats have always ruled the country although sharing the power with other political parties. At present, the government coalition is made up of Christian Democrats, Socialists, Social Democrats, Republicans and Liberals.

The Italian Industrial Relations System The salient features of the Italian industrial relations system include a low degree of formalization, the pattern of a "weak political union", and a marked ritualistic attitude in the handling of conflicts. The low degree of formalization is due to the fact that when, in the second part of the post-war period, the system was being redesigned, the parties of the system were granted the highest level of autonomy to avoid possible "constraints" of the legal system to the detriment of the trade union system. Hence, the self-determination of the three actors (unions, management, and government) with reference to such issues as union recogni-

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tion, bargaining rules, actual conflicts, etc., is regulated only by a short set of rules. Two rules are of particular relevance: Art. 39 of the Italian Constitution for the safeguard of the right of trade unions to negotiate industrial issues and the Statute of Workers (Act 300, 1970) for the specific safeguard of the workers' right to be trade union members and to play an active role therein or to recruit members in the work place, preventing the employer from hindering the activity of trade unions. The Italian trade union may be referred to as "weak political model". This is something in between the two traditional models of trade unionism: the political one and the associative one. Indeed, a characteristic mark of Italian trade unions lies in their political origins. They came into existence first as affiliations of political parties and in a second stage they also depended on them. They depended on their political origins for their social legitimization and on their concept of themselves as representative of the working class as a whole rather than of segments of it. The second identity of trade unions has its roots and consolidated itself in the Sixties and Seventies and is connected to the concept of a trade union as an association, that is, to the capability of trade unions to represent each and every interest of the working class. In the nineties, the basic principle on which Italian trade unions lie still has a political nature combined with a remarkable associative attitude which makes trade unions aware of the different interests of the working class according to the various economic sectors, companies, or professional roles. The high degree of ritual in conflicts experienced in Italian labor relations is connected to the specific role of strikes as political mobilization. Political mobilization was required both because of the need to create consensus in the relationships among the various interest groups and the various political components belonging to the same trade union and to make the public aware of the objectives being pursued in such an expressive and spectacular way as to let the unions achieve an advantage in negotiation through that means. The evolutionary stages of the Italian industrial relations system can be identified as follows: birth, development, institutionalization, crisis, readjustment, and segmentation. When the trade unions system was born, it depended heavily on the political system. Top management had strong power and trade unions were hardly recognized at social and legal levels. This dependence of trade unions on the political system was a constant feature in Italy, even though economic conditions kept changing, until the Fall of 1969, when the development stage began. At that time, Italian trade unions ceased to be the "transmission belts" of their respective political parties of origin and took up their own positions, sometimes even opposing those of the political parties from which they had originated. New conflicts characterized that period which saw constant pressure from unskilled blue-collar workers, recent immigrants, the rural work force, and those with a relatively high education level, together with the presence of new movements such as the students' movements and the

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territorial independence associations. The new conflicts led to the creation of an informal trade union organization based on democratic decision-making processes and opposing the traditional approach of political party affiliation. In 1976, the Italian economic system entered a period of crisis. The government became more aware of the interdependence between economic and industrial relations systems, which they had previously disregarded. And trade unions became less autonomous from the political parties while negotiations focused increasingly on wage claims and became more centralized. Between 1985 and 1989, the so-called readjustment phase took place. During that period, unions lost membership and militancy, while top management put forward proposals and policies to let the labor force play a more active role in management processes. The Nineties are the years of the segmentation of industrial relations. Indeed, they look much more articulated: a number of local, autonomous trade unions coexist with major, national trade unions. Industrial relations are organized at various levels, which sometimes are complementary and sometimes in mutual opposition. Top management has become involved with collective bargaining, individual grievances, human relations strategies, and communication policies. Industrial relations patterns differ considerably not only between the North and the South of Italy, but also between small and large enterprises, public and private sectors, and industrial and service sectors. Finally, the gradual creation of a labor market of lower-level workers has taken place, which is made up of African workers. In this sector, wages are low and neither law nor contract clauses are complied with, while trade unions mobilize to gain for foreign workers the right to have their say vis-à-vis public authorities.

Trade Unions The first origin of trade unions in Italy is to be found in the birth of Local Unions (Camere del Lavoro) at the end of the 19th century. Local Unions were the direct expression of the Socialist Party and operated on a geographical basis. At the beginning of this century, Local Unions began to operate on a national basis, too. Indeed, the General Confederation of Labor (Confederazione generale del Lavoro - CGdL) was set up in 1906. The confederation was really a "transmission belt" of the Socialist Party and therefore closely followed the life of the latter. The debate between reformists and maximalists within the Socialist Party led, after lengthy sufferings, to the setting up of the Italian Communist Party. This split was reflected in the CGdL: an anarchic group split from the CGdL and set up the Italian Trade Union (Unione Sindacale Italiana). In 1917, Catholic workers entered the arena of the Italian industrial relations system and set up the Italian Confederation of Labor (Confederazione Italiana del Lavoro).

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At the time of the fascist dictatorship (1922-1943), trade unions were banned. Workers' rights were to be safeguarded by corporative organizations regulated by law. From the end of the war to 1948, there was a single "unitarian" trade union operating, that is CGIL - Italian Labor Confederation (Confederazione Italiana del Lavoro), which was the expression of workers from the left (Socialists and Communists), Catholics, and liberals (Action Party). Then from the Fifties onwards, the major trade union confederations have remained the same, i.e., CGIL (Communists - and Socialists, to a lesser extent), CISL (Catholics), and UIL (Socialists). Over the past forty years, many changes have affected the major trade unions. First and foremost CGIL, CISL and UIL have become more autonomous, that is, less dependent on their respective political parties of origin and have focused themselves more on voicing the interests and issues directly expressed by workers. Furthermore, the trade unions have become stronger in terms of members, militancy, organizational penetration, and political recognition from the Government. They are less monopolistic because other trade unions (although representing a minority of workers) have entered the scene, i.e., the so-called "autonomous trade unions". The unionization rate among employed workers was around 40 percent in 1988. In the same year, total membership of workers and retired people increased; but if only active workers are taken into consideration it decreased. Between 1980 and 1988, union membership decreased by 10 percent of the Italian working population. Figure 1 contains the essential organizational pattern of the major trade union confederations in Italy. These include the general trade unions, which claim to represent the workers as a whole, irrespective of their being union members or not. These unions are integrated so as to require a compromise between union representatives on a geographical basis and those representing the specific interests/needs of the various economic sectors. This current organizational structure is the result of certain milestones in the history of trade unions in Italy which include the following: 1.) major Italian trade unions were born to operate as driving forces for political parties therefore reproducing the same geographical structure as the parties; 2.) during the fall of 1969, trade union militancy grew thanks to pressures from the grass-roots which led in subsequent years to the major confederations experiencing significant increases in the number of their members; 3.) company unions started playing a major role within the union structure when the time came of panunionism; between 1972 and 1976 government and management granted full recognition to the major trade unions; and 4.) in 1976, a period of readjustment began, which saw trade unions take up new challenges which were considered by some as a sign of a psychological

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Figure 1 : Italian union basic organizational structure

readjustment while others viewed it as a sign of decline of the trade unions as organizations. Of the total number of union members, 51 percent belong to CGIL, 34.4 percent to CISL, and 14.6 percent to UIL. As far as membership in trade unions according to sectors is concerned, it is increasing among the civil servants and in the service sector, while it is decreasing in industry and agriculture. Nevertheless, all three major confederations are comprised of union members from all economic sectors, i.e., government, services, industrial, and agricultural, as well as retired workers from all sectors, a contingent which is rapidly increasing its percentage of union membership.

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A quantitative analysis of autonomous trade unions is very difficult because of the lack of reliable statistical sources. Autonomous trade unions have a significant number of members in public services (in particular, education, transport - especially rail transport, civil servants, and public health - especially hospitals). Their structures are based on professions (for example the unions of pilots, engine-drivers, doctors, etc.). Over the past ten years, they have witnessed a progressive, although not overwhelming, increase in their strength.

Management In Italy, management attitudes vis-à-vis trade unions have always been different in private companies and State-owned enterprises, although at present the difference is much less than it used to be. In 1960, Intersind and ASAP signed a protocol providing for collective bargaining at the company level, though keeping in compliance with rules established for bargaining at the industry level. In the Seventies, the Stateowned companies drew up pilot contracts in the field of job enrichment. In 1986, the IRI Group signed a new protocol institutionalizing a consultation and participation system between management and the labor unions. A second difference in the approach of Italian managers is to be found in the structural opposition between small and large enterprises. The policies carried out by Confindustria are characterized by a constant attempt to harmonize the two contrasting approaches. Confapi is the sole representative of a number of the small industrial enterprises. In Italy, employers' associations also differ according to the sector in which they operate and their political affiliation. The sectoral differences are of particular relevance. Indeed there are employers' associations in the industry sector, in craftsmanship, commerce, and agriculture. The level of political affiliation plays a significant role in the commerce, agriculture, and craftsmanship sectors. Con/esercenti (commerce), Confederazione Nazionale dell'Artigianato (National Confederation of Craftsmen) and Con/agricoltori (Farmers' Confederation) are held as leftist in their political affiliations, while Confcommercio (commerce), Coldiretti (agriculture), and Con/artigianato (craftsmanship) are Catholic in their political orientations. What is not relevant in Italy is the differentiation between trade and employers' associations. Employers' interests in Italy are therefore represented by a plurality of associations. Yet in the industrial sector, until 1960 Confindustria nearly played the role of monopolist in so far as strategy definition was concerned. It pursued a "free-market" oriented policy and defended entrepreneurs' privileges vis-à-vis trade unions' demands. From the beginning of the Sixties to the second half of the Seventies, the debate between Confindustria (Employers' Association) on the one hand and Intersind and ASAP on the other hand dominated the scene on

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the employers' side. Intersind and ASAP were the associations of State-owned companies whose projects differed from the ones of private entrepreneurs in that their first aim was achieving a wider participation of trade unions rather than concern for competitive viability of the firm. In the second half of the Seventies, however, the differences between private and State-owned company managements faded away to the benefit of the first (i.e., even State-owned enterprises became concerned about costs and competitiveness), while the reactive approach towards trade unions' demands was replaced by so-called "proactive management".

The State In the Italian industrial relations system, the role played by the State is two-fold. On the one hand, it is an important employer that is represented by the Minister for the Public Function and is the trade unions' adversary when renewing Civil Servants' contracts. However, the State, in fact, is also a "third party" when trade unions and private employers carry out their bargaining in the industrial, service, and agriculture sectors. It often is a political and technical mediator trying to safeguard its specific interests in industrial and economic policies. As an employer, the State may indirectly lead the private sector to approve the "upward" claims of unions by consenting to unions' policies for the public sector. As a "third party" it may be a technical mediator or, alternatively, a political pro-labor mediator or it may also be a "neutral third party" as such, taking up its own stances, which differ from those of both business firms and trade unions, to safeguard specific political interests. At the beginning of the Seventies, for the most part, the State played the role of political pro-labor mediator, often upon its own initiative. At the end of the Seventies, a three-party agreement pattern was undertaken, with national bargaining between the union confederations, employer associations and Stateowned conglomerates, and the central government, giving rise to a consensual income policy leading, in turn, to the "labor-cost contract" in 1983 (see the next section). Here are some of the issues that were negotiated then: the State taking upon itself the payment of part of the social security contributions previously owed by companies; job creation in the South of Italy; an attempt to institutionalize collective bargaining by means of centralized negotiation; participation schemes within firms; no-strike rules in return for job security and worker participation in decision-making. At the beginning of the Nineties, the threeparty pattern seems less relevant than it used to be while "proactive management" vis-à-vis the unions is starting to gain ground. A general element characterizing the role of the State as a third party in the industrial relations scenario is the low degree of institutionalization of the intervention procedures that are being left to the choice of the individual

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subjects. That is, there is very little formalization of procedures for settling industrial relations disputes or collective bargaining impasses. The choice of procedure (or whether even to continue to try to resolve such disputes) is left to the disputing parties.

Industrial Relations Structures and Processes The structure of the negotiating processes from the second part of the post-war period until 1954 was focused on the homogeneous (i.e., centralized) needs connected to the post-war reconstruction period. After 1954, decentralization ensued based on the different national industries. Decentralization further increased in 1962 when a number of issues unique to industry-level agreements had to be debated at company level. The years between the fall of 1969 and 1975 were marked by competition between centralized (national) and local (company) level negotiations to determine which would play the leading role in bargaining. The result was that companies became the location where most of the bargaining was carried out. In 1975, however, because of the need to curb nation-wide inflation, the national confederations again took a leading role in bargaining. Negotiations, therefore, took place mainly at the macro level (union confederation versus country-wide employer associations) and company levels, while the industry level was neglected. This situation continued until 1983, when an important inter-confederations agreement was signed on "labor cost". From 1983 onwards, negotiations have been carried out at company level and debate has focused on consensus-building measures rather than on the analysis of negotiating levels. Against this background, debate has taken place between those supporting the usefulness of participation schemes between unions and companies and those who, in the light of the alleged decreasing capability of unions to represent their members, stated the need for "human relations"-oriented policies of proactive management. Despite the evolutionary processes here considered (from centralized to decentralized bargaining), a constant thread remains and that is the low degree of formalization in the negotiating structure in terms of specific tasks to be performed by the various parties to the negotiation. In terms of the level of conflicts, a general decreasing trend is to be reported in terms of the number of conflicts, number of participants, and loss of working days. Yet, it is in the analysis of conflicts, sector by sector, that major changes are witnessed: in recent years, the majority of conflicts are to be found in the service sector rather than in the industry sector where they used to be. The shift of conflicts to the service sector is of particular relevance since it implies, among other things, a higher degree of public awareness of the disputes and a

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more direct involvement of consumers who become necessarily involved in the conflict together with unions, management, and the State. Patterns in industrial relations in Italy may be summed up as follows: from 1945 to the beginning of the Sixties, employers and management mostly considered unions, which were very weak, as an environmental disturbance. In this period, management actually led the negotiations, the sole issue of which was labor cost. From 1962 to the eve of the fall of 1969, the system became a more pluralistic one as trade unions enjoyed higher recognition and began to play a more important role in collective bargaining, particularly at the local level. The model continued to be that of distributive bargaining, focusing primarily on wage claims, piece-work, and working hours. From the fall of 1969 to the early Seventies, the initiative at the negotiating table started being taken by the unions, while companies were only left the chance to react. State and public authorities, furthermore, often played a crucial role in these processes, supporting the interests of unions. Negotiating issues covered a much wider scope, taking in job enrichment and participation schemes. The Eighties were characterized by a new reversal in the distribution of roles. The initiative then lay with management. The negotiating issues initially focused on company restructuring processes and subsequently gain-sharing schemes. In the Nineties, industrial relations processes appear to be more complex and segmented than they used to be, as human relations and pro-active management processes are starting to appear within companies, with mention being made of profit-sharing schemes in a scenario that seems to be extremely complex. The role of unions as representatives of the interests of workers appears to be less significant.

Prospects As far as the evolutionary prospects of the Italian industrial relations system is concerned, reference could be made to the following points: a. b. c. d. e.

political and social recognition of the unions' role in the consensus-building processes seem to be taken for granted in Italy; the role played by the unions in industry seems to be declining, while they are becoming more relevant in the public and service sectors; proactive management is on the increase and "human relations" practises are gaining ground; State-owned companies, in particular, recognize the relevance of unions' involvement processes; and the current industrial relations system, in general, seems to be much more segmented and articulated than it used to be.

Japan Koji Taira

Overview Before the Second World War, the labor movement in Japan was severely repressed, and the rate of unionization of wage and salaried workers attained a meager 8 percent or so at its all-time high in 1931. In 1940, the extant labor unions were dissolved by the government in the interest of wartime resource mobilization. In the fall of 1945, General Douglas McArthur, the Supreme Commander of the Allied Forces (SCAP) occupying Japan, directed the Japanese government to eliminate all obstacles to the labor movement. The SCAP considered the prewar repression of the labor movement as one of the major factors that permitted Japan's aggression on Asia and the Pacific (Park, 1985). The first labor legislation was the Labor Union Law enacted in December, 1945, which incorporated lessons from the pro-labor Wagner Act of the U.S.. Labor unions then arose like "mushrooms after a rain" (a Japanese saying). Union membership rose from zero to millions in a few years. In 1949, an all-time high of the unionization rate at an estimated 55.7 percent was reached (MOL, 1950:164). (Easily accessible English-language sources of information on Japanese industrial relations since 1945 include, chronologically, Levine, 1958; Sumiya, 1963; Taira, 1970; Cole, 1971; Evans, 1971; Dore, 1973; Okochi, Karsh & Levine, 1974; Cole, 1979; Hanami, 1979; Moore, 1983; Shirai, 1983; Gould, 1984; Gordon, 1985; Park, 1985; Garon, 1987; and Koike, 1988.) During this period, unions came into being by spontaneous uprisings of workers for collective action to redress past wrongs and to seek relief from hardships inflicted on them by runaway inflation. The combination of "spontaneity" and "uprising" limited the size of a typical union to the workforce of a plant or an enterprise. Plant unions of a multi-plant enterprise later federated into an enterprise union to match the corporate structure of the firm. When the enterprise-level federation of plant unions was formed, the plant unions often ceded large measures of organizational rights and powers to the federation and became its branches or locals. Thus arose Japanese-style unionism - "enterprise unionism". The Constitution of Japan, adopted in 1947, incorporates civil and human rights common in advanced democracies of the world. The constitution is the source of the legal legitimacy of labor unions and their activities. Among the

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rights guaranteed by the constitution, most relevant to the present paper are those stipulated in Articles 27 and 28. Article 27 says: "All people shall have the right and the gimu to work." This article is generally viewed as a guarantee of the citizen's right to work, which obligates the State to ensure employment opportunities to all who desire to exercise this right. A number of laws to promote employment derive from this constitutional imperative. Gimu (untranslatable, but considered similar to "duty" or "obligation") to work is an unusual constitutional stipulation for a free country with a market economy. In practice it is used as a source of legal authority for requiring the recipients of certain State benefits to work or to look for work as in the case of laws on unemployment compensation and welfare payments. It also underlies the stipulation of vagrancy as a penal offense in the law on petty crimes. (So far, the constitutional gimu to work has not been used to justify "forced labor" imposed on citizens by the State. Japan is not alone as a country whose constitution imposes a duty to work on its citizens [ILO, 1985:68].) The second and third clauses of Article 27 of the Constitution are more specific as sources of legislation for labor protection. These clauses state: "Standards for wages, hours, rest and other working conditions shall be fixed by law", and "Children shall not be exploited". From these clauses has emerged the basic law for labor protection: the Labor Standards Law. In addition to setting minimum standards for working conditions, this law requires the employer to adopt written work rules and to secure the approval of the Ministry of Labor. The Labor Standards Law further stipulates that in adopting or revising the work rules, the employer must "hear the opinions" of a labor union (if there is a union to which a majority of the employees belong) or, in the absence of such a union, of a person who represents a majority of the employees. This nuanced stipulation appears to imply that the employees have the right to representation for participation in the formulation and maintenance of work rules. The existing work rules have the legal effect of preventing individual employment contracts from including less favorable conditions of work than the standards set by the rules. Collective agreements with unions are also void unless equal to or better than the standards of the work rules. However, although the concept of "employee representation" is in the law, there is no further specification of machinery or procedure to implement it, resulting in confusion and controversy (Nishitani, 1989). Article 28 of the constitution stipulates what the Japanese commonly call "three fundamental rights" of labor: ( 1 ) right to organize a union; (2) right to bargain collectively; and (3) right to engage in collective action (right to strike). These constitutional rights are defined and implemented through the Labor Union Law, Labor Dispute Adjustment Law and other laws tailored to specific employment types such as public service and public enterprise. These laws and the Labor Standards Law protect or otherwise regulate labor markets, working conditions and employment relationships. They constitute Japan's "labor law".

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The constitution and the labor law of Japan are decidedly pro-labor. The constitutional guarantee of workers' right to organize confers an enviable status on unions by comparison to the legal status of unions, for example, in the U.S.. In addition, the Japanese Labor Union Law makes the organizing of a union fairly easy: any group of workers can claim to be a labor union so long as certain documentary requirements are met, demonstrating organizational effectiveness and union democracy. Worker groups which become labor unions are entitled to the rights and privileges that the Labor Union Law confers on unions such as protection against employers' unfair labor practices. (The law says nothing about labor's unfair labor practices.) Charges for unfair labor practices are presented to the regional Labor Relations Commissions and the National Labor Relations Commission. These commissions are tripartite, composed of commissioners representing unions, employers, and the public. They are empowered to conciliate, mediate, or arbitrate labor disputes. The tripartite composition of the labor commissions makes the proceedings there look very much like an extension of collective bargaining rather than judicial or quasi-judicial processes. A party dissatisfied with the outcome of the labor commission proceedings can appeal to the regular court of law. Despite the pro-labor constitution and labor law, only somewhat more than a quarter of Japan's non-agricultural wage and salaried workers are organized into labor unions under the terms of the Labor Union Law. Thus, the Japanese industrial relations system is "dualistic", comprising union and non-union sectors. The incidence of unionization correlates with the size of the firm, i.e. employees of larger firms are proportionately more organized than those of smaller firms. The well-known "Japanese management system" as well as its subset, "Japanese employment system" characterized by "lifetime employment" and seniority-tied wages applies largely to the large-firm sector, while the small-firm sector is more at the mercy of volatile product and factor markets. ("Japanese management system" or "Japanese management style" has been a popular subject of inquiry in recent years: see Rohlen, 1974; Clark, 1979; Ouchi, 1980; Athos & Pascale, 1982; Abegglen, 1984; and Aoki, 1984.) Large firms' drive for cost minimization under the impact of labor unions has resulted in higher productivity as may be theoretically expected (Muramatsu, 1982). At the same time, it also has generated extensive vertical conglomerations (keiretsu) in which smaller firms' labor economies are utilized by larger firms through exclusive subcontracting relationships. The above configuration of Japanese industrial relations can be examined at several points in greater detail. Limited space precludes adequate coverage of many controversial topics. All that this paper can do is to offer a bare outline of the institutional aspects of the Japanese industrial relations system, i.e., concepts, origins, growth, structure, and processes of collective bargaining as

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well as evolving objectives and strategies of industrial relations actors in response to their changing environment. The paper also derives some implications for the future from the discussed characteristics of Japanese industrial relations.

Nature of the Labor Relations Process The fact that unionization at the beginning of the postwar period was largely a spontaneous self-organization of employees of a firm has left a lasting legacy with respect to the type of organizing activity. Union organizing in Japan primarily depends upon the initiative of regular employees of a firm with little help from outside organizers. Thus, unions are generally organized on an enterprise-by-enterprise basis. This also means that the maximum extent of a union is limited by the legal boundaries of the company where it is organized. On the other hand, within an enterprise the Japanese labor union can enlist all regular employees regardless of occupational classifications. The typical union calls itself "Company So-and-So's Employee Union" (Jügyöin Kumiai). A major advantage of the Japanese enterprise union is that it minimizes management suspicion of employee motives. While it is in the nature of a union to demand "more", the enterprise union clearly sees that its gains rise or fall with the profitability of the firm. Under these constraints, management and labor can see each other as partners of a joint enterprise. The cooperative relationship between management and labor is also strengthened by other characteristics of the Japanese firm. Executives and managers are generally internally promoted and many of them were active union members during their younger nonmanagerial years. In addition, the shareholder interests are kept at bay by the device of inter-corporate shareholding and a heavy use of bank loans for capital expansion. The cooperative relationship is not automatically ensured by enterprise unionism. Efforts are made by both labor and management to promote industrial peace. Sophisticated human resource management (considered either a subtle version of employer paternalism or a modern form of micro-corporatism) goes a long way toward ensuring the cooperative climate of industrial relations. The union has a structural weakness that prevents it from generating and pursuing a clear-cut strategy: the membership is too diverse because it embraces all regular employees, male and female, young and old, white collar and blue collar, college graduates and high school graduates. Leaders tend to rise from the ranks of college-educated male white collar employees. The leadership qualities they demonstrate are duly noted by higher management. These qualities make them highly eligible for promotion to managerial positions. Thus, union activities are incorporated into the merit system of the enterprise useful for the selection of

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future managers and executives. This makes the Japanese firm look like a "worker-managed firm" to some (Evans, 1986), while others deride the union as a "junior partner" of management. However, there are safeguards to prevent the union from becoming a mere stooge of management. Employee voices are heard and heeded through labor-management consultation and collective bargaining. Consultation is formalized by a joint labor-management consultative council, which meets regularly, e.g., once a month. Collective bargaining takes place upon demand from the union. Refusal to bargain when demanded by the union makes the employer liable to an unfair labor practice charge. Issues or subjects for consultation range more widely than those for collective bargaining. The Labor Union Law stipulates how labor and management should conduct collective bargaining, but does not define the subjects of bargaining. In principle, anything is bargainable. Usually, consultation serves as a screening device to determine what should be collectively bargained. The type and outcome of consultation vary from subject to subject, e.g., "management talks, the union listens" on financial reports; the parties "confer" on the social responsibility of the firm; the parties "seek consensus" on working conditions, etc. Consultation also varies from enterprise to enterprise in degrees of formalization or institutionalization as to its composition, schedule, decision rules, etc. Larger firms tend to formalize the distinction between matters for consultation and those for bargaining. Even so, it is not true that matters considered bargainable are always excluded from pre-bargaining consultation. Where consensus fails to emerge at consultation, a labor-management conflict is implied. If further consultation fails to break the impasse, the parties then agree to "go to war" by referring the unsettled issues to collective bargaining. Collective bargaining is a procedure which forces the parties to make up their minds one way or another. This is because collective bargaining allows the parties to use bargaining power against each other (like a strike by the union or a lock-out by management) in search of an agreement. (Even if the parties, being essentially gentle and kind, may not want to use power, the law encourages them to do so where nothing else is available for solving the problem at hand. They must use it, however distasteful that may be, so they can continue to work happily thereafter. In the Japanese ethical climate, "bargaining" is unpleasant; it implies cunning, guile, bad faith, etc. Labor law's concept of "good faith bargaining" is essentially a contradiction in terms and creates enormous legal difficulties in Japan.) The collective bargaining situation also allows the union to do what traditional values of Japan would not, i.e., to charge the employer with unfair labor practices. Just as "bargaining" runs against traditional Japanese culture, so does "grievance". American-style grievances as individual complaints about the foreman are rare on the Japanese shop floor. Grievances are generalized as defects of the system and removed or preempted through regular consultations.

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More commonly, conflict and tension dissipate in the atmosphere of camaraderie after a few drinks at the after-hours socials which the foreman obligingly hosts. (The foreman-worker relationship is not exactly a management-labor one in Japan, because the foreman is often a union member, contrary to a stipulation in Article 2 of the Labor Union Law, which excludes "persons in supervisory positions" from union membership. This may imply that the Japanese "foreman" has far less supervisory powers than his/her American counterpart.) Experience shows that the dominant bargainable, hence "strikable", issue is the size of the average annual wage increases or the size of semi-annual bonuses. Given the enterprise union's extensive knowledge of the financial conditions of the firm, the "zone of disagreement" between the firm's ability to pay and the union's desire for more cannot be too wide or too conflictual. The bargaining over the annual across-the-board wage increases ("base-up" in Japanese) is essentially a budget negotiation. The more the firm gives to the union, the less it has for capital formation or technological improvements. Management may therefore argue that a smaller wage increase today leads to a larger increase tomorrow through the growth of the firm. The union and workers may prefer a larger wage increase today in the belief that a great many factors, most of them external to the firm, such as effective demand and price level, are more powerful determinants of the firm's growth than the labor cost. This type of bargaining is a classic example of rational, non-confrontational bargaining. (Indeed, the pure bargaining model in Menil [1971:21-28], though not inspired by Japanese experience, appears to be a most faithful modelling of Japanese wage bargaining.) Much depends on the degree of resolve behind the union demand or the management resistance. The most effective demonstration of the union's will to fight is the strike. In Japanese collective bargaining, the strike vote is taken early, even as soon as the bargaining starts. The extent of membership support for the union as revealed by the vote for the strike is also heeded by management. The union calls a strike at a certain strategic point during bargaining. Or it may prefer to schedule intermittent (now on, now off) strikes until satisfactory terms are obtained. The principal purpose of the strike is to demonstrate how solid the membership support for the union is, not to force the employer to realize how costly it is to disagree with the union. The cost the employer most fears is non-pecuniary - damages on his prestige and public image. Strikes range from a few hours to a few days at a time. Long drawn-out strikes are rare in Japan. From this, many believe that Japanese unions are "weak". On the other hand, Japanese unions have won (or, at least, they have been instrumental in bringing about) terms and conditions of employment exceeding those that the "strongest" unions in other countries have won, e.g., the "three divine treasures" of the Japanese employment system: (1) lifetime employment; (2) seniority-based wages and promotions; and (3) union security. (Ray Marshall

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is almost unique in holding the view that Japanese unions are stronger than American [Marshall, 1987:92].) At the minimum, then, history shows that the birth of "excellent" human resource management in Japan was mediated by earlier labor union militancy. The primacy of employee rights and well-being among priorities of the Japanese firm certainly could not have arisen in the absence of a strong and sustained representation of employee interests. In fact, Japanese management has been pushed, shoved, and often beaten into better behavior and performance by unions unleashed by the SCAP's democratization drive. Many excellent companies of today suffered from interminable quarrels and battles with unions after World War II until around 1960. As a consequence, unions and managements finally awoke to the futility of the power struggles that could reduce both sides to a shambles (a negative-sum game). They then sought ways to put their power to a constructive use (a positive-sum game). The generally "harmonious" labor-management relations of postwar Japan dates from about 1955 at the earliest.

Industrial Relations Actors The primary, front-line actors who determine wages, hours and other working conditions are the unions and managements of the individual enterprises. The enterprise-level unions or managements are aggregated in steps into national "peak" organizations. The enterprise unions form industry federations, which in turn affiliate with national centers. Businesses also form industry associations, which then affiliate with national organizations. These "peak" organizations of business and labor, together with the national government, interface in ways conceptually analogous to "corporatism" (Levine and Taira, 1985). Until recently, there were four stable national centers of labor unions: Söhyö (General Council of Trade Unions), which was dominated by public sector unions, D mei (Confederation of Labor) dominated by private sector unions, Shinsanbetsu (New Federation of Industrial Organizations) and Chüritsu Rôren (Federation of Independent Unions). In 1987, before the epochal unification of the labor front inaugurated in November (Nitta, 1988; Taira, 1988), labor unionists covered by these four national centers accounted for about 65 percent of the national total of union members. There were other smaller national federations as well as unaffiliated enterprise unions. The unification of the labor front has since dissolved Dömei, Shinsanbetsu and Chüritsu, and regrouped many of their constituents in a new national confederation, Rengó (Japanese Confederation of Private-Sector Labor Unions). In November, 1989, Sôhyô merged with Rengó to form one large (8 million members) trade union center. This new confederation is still referred to

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as Rengó, though in English it is revised to read the Japanese Trade Union Confederation. On the other side, Japanese industry has also generated an extremely powerful "peak" organization: Keidanren (Japanese Federation of Economic Organizations). Keidanren exerts a "make or break" kind of influence on the Japanese government through financial contributions to political parties, well-researched policy proposals, and extensive participation in advisory councils of the government. Firms also belong to regional chambers of commerce and industry, which affiliate with Nisshö (Japanese Chamber of Commerce and Industry). Individual managers and executives form a group called Döyukai (Japan Association of Corporate Executives, J.A.C.E., until recently known as the Japanese counterpart of America's Committee for Economic Development, C.E.D.) to examine economic and social problems of the nation and to make policy proposals. As employers, firms have formed Nikkeiren (Japanese Federation of Employers' Associations). From the industrial relations standpoint, this is the most important business association (Levine, 1984). In stature and prestige, it ranks with the Japanese government's Ministry of Labor. The national centers of labor unions are its adversaries. The recommendations of the national centers of business and labor are at best indirect and advisory with respect to the enterprise-level bargaining and consultation over wages, hours, and working conditions. The national centers conduct research on the state and trends of the economy and publish their analyses and proposals. They also cultivate relations with all sections of the government to promote preferred legislation and policy. There are a number of formal arrangements through which labor may hope to influence government policy, e.g., the ubiquitous advisory councils attached to the prime minister's office and various ministries and agencies as well as more informal conferences personally sponsored by the prime minister and other ministers of State. The business and labor interests along with other diverse interests are represented at these councils and conferences. The most important conference from labor's point of view is Sanrokon (Industry and Labor Conference) initiated in 1970. Its formal sponsor is the Minister of Labor. The conference meets regularly and brings together eminent employer, labor, and government leaders. The participants do not engage in formal negotiations. They exchange views on important economic and labor questions. They also hear relevant expert presentations. The three levels of industrial relations - national-level participation in the discussion of public policy, industry-level interactions of diverse kinds, and enterprise-level consultation and bargaining - are not formalized as a corporatist structure, i.e., a hierarchy of interest aggregation or a chain of command which transmits the national-level agreements downward and enforces them as part of the shop-level contracts. But informal coordination and liaison are

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extensive, i.e., understandings among top government, industry, and labor leaders trickle down to the enterprise level and morally constrain the process and outcome of the enterprise-level collective consultation and bargaining. In this sense, one might call the Japanese industrial relations system an "informal corporatism" (Taira, 1978). A good test for the efficacy of this "informal corporatism" was the success of informal incomes policy in controlling the wage and price inflation in the wake of the 1973 Oil Shock. For more than 10 years up to that time, there had been an increase in worker militancy - shuntó after shunto (generally rendered "spring offensive" - apparently borrowed from the Vietnam War event, the Tet Offensive - though its reality is collective bargaining over wage increases in the spring of each year). Demonstrations and strikes increased year after year. In parallel, there were larger and larger wage increases as well as an acceleration of price inflation. The quadrupled oil price in the fall of 1973 triggered runaway inflation, which brought about an unprecedented rise in labor disputes in the spring of 1974. Unions won a 32 percent wage increase against a 22 percent inflation. At the same time, an unprecedented recession occurred, turning the 1974 GNP growth rate slightly negative for the first time after 20 years of 10 percent annual growth rates. There was an acute need for controlling wage and price inflations. The "informal corporatism" demonstrated its strengths in this economic environment. In the month immediately following the 1973 shuntò settlements, the government launched rounds of intensive national-level joint consultation with employers' associations and labor unions to achieve wage and price restraints. Each of the tripartite actors agreed to do its share toward that objective. The government would tighten money supply to reverse the inflation, while avoiding or minimizing the risks of business failures and increased unemployment by a liberal fiscal policy and an assortment of temporary measures to soften the blow of economic adjustment. Firms would risk lower profits by not passing costs to consumers through higher prices. Unions would moderate the demand for money-wage increases at the risk of a decline in real wages. These "risks" would not occur if each party kept its promise (Taira, 1978:173). These risks did become real to some extent (a rise in the public debt, higher unemployment rate, lower profits, higher bankruptcy rates, reduced real-wage increases, etc.). But the restraints on money wages and prices were realized: by 1979, the annual rate of inflation was down to less than 4 percent, while that of money-wage increase was down to 6 percent (Levine and Taira, 1985:248). At the same time, labor disputes sharply decreased. The informal corporatism worked! This has since been celebrated as "Japanese-style incomes policy". However, one should not overestimate the extent of Japanese corporatism. At present, this corporatism is limited to the labor sector and may have "ripple effects" on other sectors of the economy only insofar as the processes of labor

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markets and industrial relations can affect them. The most glaring weakness of the institutional structure of the Japanese economy is that outside the labor sector, what prevails is "corporatism without labor" (Pempel and Tsunekawa, 1979). This is graphically shown by the analysis of the configuration of interest representations on two of the most powerful policy advisory councils, the Economic Council (Keizai Shingikai) that deliberates economic planning and the Industrial Structure Council (Keizai Közö Shingikai) that works on industrial policy. Although there are a few labor union leaders on these councils, they are hopelessly outnumbered by far more numerous representatives of the business interests (Taira and Wada, 1987). Thus, it appears that the labor unions have little clout over forces and processes which largely determine the parameters of the Japanese economic policy. By and large, the labor sector has to adjust to the role assigned to it by these exogenous determinants. However, the Economic Council and the Industrial Structure Council are sensitive to the limits and potentials of the labor sector. Indeed, should the "powers that be" show signs of working for narrower "class interests" at the expense of labor, unions and workers could still retaliate by reverting to class struggles and bringing the whole economy to a standstill by their Constitutional power of collective action. Thus, Japanese corporatism "without labor" works as if it were corporatism "with labor". There is a basic structural reason why Japanese corporatism cannot but be informal even in the labor sector. It is that the "sovereign" units of organized labor are enterprise unions. Industry federations and national centers exist so long as enterprise unions are willing to support them. This may be seen by where resides - among the three levels of organization - the primary right to collect, own, and use union dues. This right lies with the enterprise union, which collects (through dues checkoffs) a percentage of the members' wages and earnings. The percentage varies widely, although according to one study, it averages at 1.6 percent (Naito, 1983:147). If the enterprise union is an affiliate of an industry federation, it makes a contribution to the latter in the amount of 10-20 percent of its dues income, retaining 80-90 percent for itself. The industry federation in turn makes a contribution to the national center with which it affiliates. The enterprise union can remain unaffiliated if it dislikes giving up any portion of its dues income. Likewise, the industry federation can stay away from a national center for the same reason. All this means that industry federations survive largely at the pleasure of enterprise unions and that national centers likewise depend on industry federations. The location of "union sovereignty" becomes slightly complicated in a multi-plant enterprise. The primary locus of self-organization is the plant. Therefore, "sovereignty" initially resides with the plant union. For strategic reasons, however, plant unions of an enterprise usually generate an enterprisewide federation (kigyören) and transfer varying measures of "sovereignty" to the federation. The logical primacy of the federation's collective bargaining with

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the corporate headquarters over plant-level collective bargaining eventually makes the enterprise federation more "sovereign" than the plant union. In the end, when the individual worker's membership is defined to be primarily with the enterprise federation and secondarily with the plant union, the federation becomes the union in its own right, reducing the plant union to the status of its branch or local. This tug of war over "sovereignty" also occurs between enterprise unions and industry federations. As a consequence, the question of how many "unions" there are in Japan becomes an intriguing question. Definitions in official statistics are rather mystifying. Two kinds of "union" are set up. One is "unit union" (Tan'i Soshiki Kumiai), which is whole and autonomous by itself. (Perhaps "single union" may be a better translation.) It has no branches or locals. The other kind of "union" is what one usually considers a "labor union" (Tan'itsu Soshiki Kumiai), which though "unitary" in organizational character, comprises two or more subordinate units analogous to "unit unions". By these definitions, in 1987, there were 34,033 "labor unions" on the basis of organizational character or 73,138 "unit unions". The membership was 12,271,909 persons by "labor union", and 12,195,437 by "unit union" [MOL(b), 1987:285]. Internal union democracy is rather thorough in Japan. Union officials are elected by the membership for the term of a year or two. This applies to all levels of organized labor: unit union, enterprise union, enterprise federation, industry federation, and national center. As described above, power originates and remains at the bottom. It is gingerly "delegated" upward at the discretion of the unit or enterprise union. Elected union officials do not lose their employee status; they are merely on leave. They even earn promotions in absentia according to the company rules of internal promotion. Union officials, released from union duties, may therefore "return" to positions higher than those they left earlier. Thus an interesting situation arises: the long-service national center leaders are equivalent to higher-level managers in their "home enterprises". When they return, the firm welcomes them into ranks they have attained through promotions in absentia. Japanese human resource management allows the firm to create a hierarchy of ranks (attained by qualifying experiences and seniority) alongside the usual structure of line positions (attained by performance). Years of union leadership experiences qualify employees for promotion-equivalent upgrading.

Current Trends in Industrial Relations Two major developments in Japanese industrial relations require a careful evaluation. One is the slow, but steady decrease in the rate of unionization of

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wage and salaried workers. The other is the unification of the labor movement at the national level. It should be warned that a direct application to Japan of the method of analysis of similar phenomena occurring in other countries may lead to a misunderstanding. The rate of unionization of wage and salaried workers (union density) attained an all-time high of 56 percent in 1949. Under concerted counter-offensives of the SCAP, Japanese Government, and employers, the union density subsequently decreased, marking its lowest at 32 percent in 1959. Thanks in large part to the expansion of employment in the unionized sector (larger enterprises) during the miracle growth of the 1960s, the union density increased and reached another peak at 35 percent in 1970. Since then, together with the down-sizing of the unionized large-firm sector, the union density has been slowly but steadily decreasing. In 1986, the union density stood at 28 percent. (For labor union statistics, see the annual publications by MOL(a, b), JIL, JPC, & Ohara.) The interpretation of the trends in the union density requires caution, however. First of all, in terms of sheer head count of individual union members, the decrease between the peak reached in 1975 (5 years after the peaking of the density) and the 1986 membership is very small: only 2 percent. Secondly, Japanese labor unions are "enterprise unions" and the size of a union is primarily determined by the employment policy of the enterprise rather than by the organization drive of the labor movement. Thirdly, the predominant mode of organizing a new union is self-organization of workers employed in the same enterprise. Thus, even while the total number of union members stagnated, the number of unions kept increasing until 1984. There are two ways in which the national total of union members increases: (a) by employment growth in unionized firms; and (b) by the birth of new unions. Likewise, there are two ways in which the total of union members decreases: (a ) by employment contraction in unionized firms; and (b ) by the dissolution of unions. Since 1970, a < a (meaning that larger firms were cutting back employment by "lean and mean" employment policy). However, at the same time, b > b (meaning that the number of newly organized unions outnumbered the number of dissolved unions). All told, in the last 15 years, the net contraction of employment in unionized firms (larger enterprises) outnumbered the net membership accretion by new organizations. Thus, the number of unions increased but the number of union members decreased. This mechanism of union turnover (quite different from its U.S. counterpart where the strength or weakness of the organizing drive is very important and union certification extremely cumbersome) means that the elan of spontaneity for unionization among Japanese workers has not declined, contrary to the implications of widespread lamentation over the decline in union density. Internal union democracy, which is alive and well, also contributes to union turnover. Just as a union comes into being by a self-organization of employees, a new union can arise within the existing union when some members are

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dissatisfied with it and want a union of their own. This new union born within the existing union is called "second union" or "number-2 union". The number-2 union then may succeed in capturing more members from the number-I union and become a dominant or majority union in the enterprise. There are many reasons why some workers may become dissatisfied enough to desire a new union of their own. The existing union may become ideologically too radical or too adversarial vis-à-vis management to be effective in securing more down-to-earth improvements in wages or working conditions. Some workers then may feel that a more cooperative strategy is needed. Management also may discretely or openly advocate that it will cooperate with a more moderate union. By doing so, management comes quite close to brushing with illegal "unfair labor practices". Nevertheless, this is how during the early 1950s number-2 unions arose and became dominant in many companies. Number-one unions which have survived have done so by becoming more moderate or reasonable or by resigning to their minority status. However, the political dynamics of union democracy can cut the other way: some workers may become dissatisfied with the timidity of the existing union and want a stronger union of their own. Then competition over the membership turf starts all over again. This possibility, not disregarded by any union leadership with a modicum of survival instinct, has kept many unions "adversarial" enough to prove that they are fighting for the benefit of the membership. The often astonishingly radical tone of union rhetoric which is a general characteristic of Japanese enterprise unions indicates the character of union politics. Some studies indicate that the number-one unions of the earlier days, though reduced to a minority status, still survive in many enterprises (estimated to be 15 to 25 percent of unionized firms). Some of the minority unions have actually regained their once-lost majority status in recent years (Kawanishi, 1981; Kawanishi & Yamamoto, 1988). Finally, many firms with no labor unions still have employee associations which behave very much like unions (Koike, 1988; Nakamura, 1988). These employee "associations" are not "unions" only because they have not taken the step to register with the labor administration under the labor law. Should some of these "associations" decide to take that step (what drives them to that crucial action would be similar to the dynamics of union politics mentioned above), the Japanese union density would make a quantum jump. Data on non-union employee associations are scarce. The 1977 Labor Ministry inquiry into the state of labor-management communications yields information on the extent of labor-management consultation machineries in non-union establishments. These machineries exist in 40 percent of all nonunion enterprises employing 100 or more workers, higher in larger firms and lower in smaller firms (Nakamura, 1988:12-13). In addition, in 64 percent of firms with the consultation machineries, employee representatives are elected by the employees themselves and consult on a wide range of matters related to

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management plans, production schedules, safety, wages, benefits, layoffs, retirement, and other aspects of working and living conditions. To the extent employee associations have a voice on wages, benefits, hours, and working conditions, they are no different from labor unions. In Japan, the legal requirement (mentioned earlier) that in making and changing work rules, the employer "hear the opinions" of an employee representing a majority of employees appear to be an open invitation for employee associations to have a voice on work rules. Further, in principle, employee associations also enjoy the workers' rights guaranteed by the Constitution of Japan, including of course the right to collective action (strike). When labor-management relations deteriorate and drive employee associations to a strike, they can easily change themselves into bona-fide labor unions to take advantage of the protective measures afforded by the labor law. A major sign of the Japanese labor movement's continuing vitality is the reorganization of national centers of labor unions which is in the right direction from the perspectives of modern corporatism, i.e., toward a single "peak" organization representing the whole of the working class, capable of negotiating with other peak organizations for terms fair and honorable to the workers. At the time of its birth, Japanese unionists aggregated into Rengó numbered 5.5 million, roughly 45 percent of unionists. Although private-sector unions have played a leading role and numerically dominate Rengo, its objective is the unification of all labor unions, private and public. As stated, a major step toward this occurred with the merging with the public-sector union in the fall of 1989.

Conclusion The most formidable challenge to the life and vigor of labor unionism at the enterprise level is employers' enlightened human resource management. In the United States, progress in human resource management is inspired by an intense dislike of unions. In Japan, since the late 1950s, human resource management has been largely accommodative and conciliatory vis-à-vis a micro-corporatism which encourages employees and unions to participate in the management of the firm. Various enterprise unions combine into industry federations, which in turn combine into national centers. National labor leaders participate in the informal macro-corporatism of Japan, working with representatives of business and government in a number of advisory or consultative councils officially established in various ministries. With respect to broad policy matters affecting the national economy as a whole, labor's principal corporatist opportunity is participation in Sanrokon, the conference of industry and labor representatives regularly convened by the Minister of Labor.

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The membership of Japanese labor unions has remained at a plateau for the last 15 years, although the union density has been declining. However, the interpretation of these statistics requires special care based on the Japanese logic of how a union comes into being and how a union, once organized, grows or diminishes. The picture is complicated by the existence of numerous employee associations which behave like unions. In Japan today, one may broadly say that more than a quarter of wage and salaried workers are in unions, about a third in employee associations, and the rest unorganized. Unorganized workers are mainly in small enterprises where face-to-face employer/employee relations minimize the need for formal procedures. They also benefit from the minimum legal standards of wages, hours, benefits, working conditions, and employer conduct. The improvement of these standards depend very much on the political activities of the national labor centers and their political allies in the national legislature. In summary, in the organized sector, unions and quasi-unions can look after their own interests; in the unorganized sector, labor-protective legislation plays a large role for improving labor standards; and the national labor centers strive to improve the law through corporatist politics.

References Abbeglen, J. C. (1984) The Strategy of Japanese Business. Cambridge, MA: Ballinger. Aoki, M. (ed.) (1984) The Economic Analysis of the Japanese Firm. Amsterdam: North-Holland. Athos, A. G. and R. T. Pascale (1982) The Art of Japanese Management. N e w York: Warner Books. Clark, R. (1979) The Japanese Company. N e w Haven: Yale University Press. Cole, R. E. (1971) Japanese Blue Collar. Berkeley: University of California Press. Cole, R. E. (1979) Work, Mobility and Participation: A Comparative Study of American and Japanese Industry. Berkeley: University of California Press. Dore, R. H. (1973) British Factory/Japanese Factory. Berkeley: University of California Press. Evans, R., Jr. (1971) The Labor Economies of Japan and the United States. N e w York: Praeger Publishers. Evans, R., Jr. (1986, September 20) "The Japanese Firm as a Worker Managed Enterprise". Paper presented at the Japan Economic Seminar, New York. Garon, S. (1987) The State and Labor in Modern Japan. Berkeley: University of California Press. Gordon, A. (1985) The Evolution of Labor Relations in Japan. Cambridge, MA: Harvard University Press. Gould, W. B. (1984) Japan's Reshaping of American Labor Law. Cambridge, MA: MIT Press. Hanami, T. (1979) Labor Relations in Japan Today. Tokyo: Kodansha International.

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JIL (Japan Institute of Labor) (Annual) Nihon rödö undö hakusho [Japanese Labor Movement White Paper]. Tokyo. JPC (Japan Productivity Center) (Annual) Katsuy rödö tökei [Practical Labor Statistics], Tokyo. ILO (International Labour Office (1985) World Labour Report. Vol. 2. Geneva: International Labour Office. Kawanishi, H. (1981) Kigyöbetsu kumiai no jittai [Realities of Enterprise-based Labor Unions]. Tokyo: Nihan Hyöronsha. Kawanishi, H. and K. Yamamoto (1988) "Shösüha kumiai kara tasüha kumiai eno hatten jöken" [Conditions of Development from a Minority to a Majority Union], Shakai Kagaku Kenkyü [Social Science Research], 40, 2, 179-223. Koike, K. (1988) Understanding Industrial Relations in Modern Japan. New York: St. Martin's Press. Levine, S. Β. (1959) Industrial Relations in Postwar Japan. Urbana, IL: University of Illinois Press. Levine, S. Β. (1984) "Employer Associations in Japan". In J. P. Windmuller and A. Gladstone (eds.), Employer Associations and Industrial Relations, 318-356. Oxford, UK: Clarendon Press. Levine, S. Β. and Κ. Taira (1985) "Japan's Industrial Relations: A Social Compact Emerges". In H. Juris et al., (eds.), Industrial Relations in a Decade of Economic Change, 247-300. Madison, WI: Industrial Relations Research Association. Marshall, R. (1987) Unheard Voices. New York: Basic Books. Menil, G. de (1971) Bargaining: Monopoly Power versus Union Power. Cambridge, MA: MIT Press. MOL (Ministry of Labor) (1950) Analysis of Labor Economy of Japan. Tokyo: Ministry of Labor. MOL (a) (Annual) Rodo hakusho [Labor White Paper]. Tokyo: Ministry of Labor. MOL (b) (Annual) Yearbook of Labor Statistics. Tokyo: Ministry of Labor. Moore, J. (1983) Japanese Workers and the Struggle for Power. Madison: University of Wisconsin Press. Muramatsu, K. (1982) Nihon no rödö shijö bunseki [An Analysis of Japanese Labor Markets], Tokyo: Hakuto Shobo. Naito, N. (1983) "Trade Union Finance and Administration". In T. Shirai (ed.), 145-159. Nakamura, K. (1988) "The Functions of Employee Organizations" [in Japanese]. Monthly Journal of the Japan Institute of Labor, 30, 12, 11-21. Nishitani, S. (1989) "Legislative Problems Concerning the Employee Representative System in Japan" [in Japanese], Monthly Journal of the Japan Institute of Labor, 31, 5, 2-15. Nitta, M. (1988) "Birth of Rengo and Reformation of Union Organization". Japan Labor Bulletin, Vol. 27, No. 2, 5-8. Ohara (Ohara Social Problems Research Institute) (Annual) Nihon rödö nenkan [Japanese Labor Yearbook], Tokyo: Rödö Junposha. Okochi, K., B. Karsh and S. B. Levine (eds.) (1974) Workers and Employers in Japan. Tokyo: University of Tokyo Press. Ouchi, W. G. (1980) Theory Z. New York: Avon Books. Park, S. (1985) U.S. Labor Policy in Postwar Japan. Berlin: Express Edition GmbH.

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Pempel, T. J. and Κ. Tsunekawa (1979) "Corporatism Without Labor?". In P. C. Schmitter and G. Lehmbruch (eds.), Trends Toward Corporatist Intermediation, 231-270. Beverly Hills, California: Sage Publications. Rohlen, T. P. (1974) For Harmony and Strength - Japanese White Collar Organization in Anthropological Perspective. Berkeley: University of California Press. Shirai, T. (ed.) (1983) Contemporary Industrial Relations in Japan. Madison, WI.: University of Wisconsin Press. Sumiya, M. (1963) Social Impact of Industrialization in Japan. Tokyo: UNESCO. Taira, Κ. (1970) Economic Development and the Labor Market in Japan. New York: Columbia University Press. Taira, Κ. (1978, November) "The 1973-1978 Stagflation in Japan: A Watershed?". Current History, 75, 170-173, 184. Taira, Κ. (1988, April) "Labor Federation in Japan". Current History, 87, 161-164, 177-178. Taira, Κ. and T. Wada (1987) "Business-Government Relations in Modern Japan". In M. S. Mizruchi and M. Schwarts (eds.), Intercorporate Relations, 264-297. New York: Cambridge University Press.

Jordan Muhsen

Makhamreh

Historical Overview Jordan, a country of approximately three million people and ninety thousand square kilometers, is strategically located in the center of the Middle East. In spite of its limited natural resources, Jordan enjoys a developed market-oriented economy, advanced infrastructure, highly educated population, and political stability. Jordan also maintains a good relationship with all countries in the region, especially the rich oil producing countries, where approximately forty percent of its qualified labor works. During the last fifteen years, Jordan has become a center for education and business for the region. Industrial relations in Jordan have emerged in the early Fifties of this century as an outcome of two major factors. The first factor involves the industrialization process that started after 1950 in the country by establishing production units for phosphate and cement industries. These industries have created a new workplace with new rules and conditions that are different from those in the agricultural field, the dominant workplace for Jordanian labor before that. The second factor includes the legalization of trade unions in Jordan in 1953 to operate freely and to represent labor in collective bargaining with employers. Labor Law No. 35 of 1953 recognized the right of the non-agricultural workers in the private sector in Jordan to form and join trade unions and to bargain collectively on issues related to their employment and working conditions with their employers. The law allowed seven or more workers in an organization to form or join a trade union and to constitute a recognized bargaining unit. Before 1953, unionization activities were disorganized and underground and considered illegal, punished by the law. After 1953 unionization activities substantially increased which led to the formation of a large number of unions and the establishment of the General Federation of Trade Unions, a governing body that represents all unions in Jordan. Unionization activities during that period were disorganized and confused which led to duplication of membership due to union competition to attract membership (Jawhar, 1972:26). Unionization activities subsided after the 1958 ban on political parties because most of the labor unions in Jordan had been associated indirectly with the banned political parties. In 1961 a new Labor Law was enacted spelling out

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details about union representation, election, collective bargaining process, and employment conditions. In 1976 the Ministry of Labor, based on Article 84 of the Labor Law, restricted the total number of labor unions to seventeen in order to eliminate duplication and competition among labor unions.

Nature of Labor Relations Process Collective bargaining in Jordan is decentralized. It originates only at the organizational level. There are no wide centralized bargaining activities that include all union membership in all industries. Collective bargaining is only allowed between one organization and one union at a time. Collective bargaining occurs between representatives of labor and management when the existing labor contract is close to expiring and a new one is needed, or when a dispute arises in the workplace due to employees' dismissal or layoff or disagreement on contract-interpretation. Both parties bargain collectively on almost any issue related to working conditions in the workplace, including wages, benefits and services, annual paid vacation, transportation, housing, etc. Most of the time collective bargaining is initiated by unions to settle issues of concern to both sides. If the parties in the collective bargaining process fail to reach an agreement, then the labor law mechanism of dispute settlement is brought into the process by the demand of one of the parties involved, or by the initiation of the Ministry of Labor itself. The labor law gave the Ministry of Labor the power to interfere to try to settle the dispute if it is believed that the dispute is a threat to industrial peace in Jordan. Given the sensitivity of the political leadership in Jordan (and all developing countries) to labor unrest, the government acts quickly at the early signs of labor unrest to contain and control it and ultimately to solve it. The mechanism of the Ministry of Labor in Jordan for settling a collective bargaining dispute consists of three steps: First, conciliation officers from the Ministry of Labor are asked to interfere and mediate between the parties to help them settle the dispute. The Labor Law gives those officers fourteen days to help the parties settle the dispute. If they fail to reach a solution during that period, they have to write a report to the Ministry of Labor evaluating the situation and explaining the reasons why a settlement has not been reached. Second, the Minister of Labor, based on his evaluation of the conciliation officers' reports, forms a conciliation board to look into the dispute and to try to solve it. The board consists of a neutral chairman and equal number of members of the parties involved in the dispute. The selection of the chairman of the conciliation board is usually based on his ability, knowledge, experience, and

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neutrality. Most of the time he/she is a university professor, well-known business man, retired judge, or labor leader. The conciliation board has the right to fully investigate the dispute, to call on anyone to testify, to look to any labor or management documents, etc. The role of the conciliation board is to help the parties reach a settlement. It does not have the power to force one. The Labor Law gives the board six weeks to reach a settlement, after which a report should be sent to the Minister of Labor explaining the situation. If the board fails to reach a settlement, then the Minister of Labor has the right to go to the third step. The third step is the Industrial Court. It is part of the judicial system in Jordan and is formed from judges in the judicial system for a two-year term to rule in labor disputes and labor issues only. The decision of the court is final and binding to the parties involved. Third party intervention, as is shown, is restricted to the Ministry of Labor. No traditional arbitration practices are used in collective bargaining in Jordan. During the settlement process, the labor law states clearly that no strikes or lockouts are permitted and violators are punished by the law.

Strike Activities in Jordan Strike activities in Jordan are rare for two reasons: First, the settlement mechanism of the labor law insures that any collective bargaining disputes will be fairly resolved through negotiation of mediation or by the court, thus there is no justifiable excuse for strikes. Second, the society, management, and more significantly, the government look negatively toward strikes and strikers, and that extremely discourages labor from resorting to such activities. The workers' right to strike in the labor law is an academic issue because in actuality there is no place for a strike. The settlement process leaves no place or excuse for strikes. Strikes can only occur before the beginning of the settlement mechanism or after the settlement if management drags on the implementation of the agreement, and in both cases the Ministry of Labor insures that it is present before anything gets out of hand. During the last fifteen years, only two wildcat strikes occurred in Jordan, and they were immediately contained and dissolved by union leaders themselves because they occurred during the settlement process and that action is considered illegal, punishable by the law. In a recent study of labor leadership in Jordan (Makhamreh and El-Faleh, 1992), thirty-five percent of those leaders pointed out that they are against all forms of strikes because it only causes harm to labor, while sixty-two percent pointed out that they support a strike only if it is the last resort. Given the situation in Jordan, the government will not allow things to reach that level.

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Agreement Behavior in Jordan Collective bargaining outcomes include agreement on all issues related to employment conditions and the issues that cause labor disputes. Agreement on these last for a certain period of time specified clearly in the terms of the contracts. Both labor and management are responsible to live up to the spirit of the contract and to abide by it under the watchful eyes of the Ministry of Labor. Labor disputes rarely occur during the life of the contract. They take place when a new demand is negotiated in a new contract or when there is a layoff or dismissal. Agreement on wages, benefits, and services are basically the content of any collective bargaining contract. Union security clauses such as closed shop or union shop are not included in the agreement because workers in Jordan are free to work anywhere without any union restriction (Al-Quamari, 1982:58). Basic issues such as layoff, unfair discharge, number of hours worked, overtime compensation, payments for time not worked, annual vacation, grievance procedures, which are typically included in a labor contract (Allen and Kearveny, 1988:21-22), are not included in labor contracts in Jordan because they are stated clearly in the Labor Law.

Industrial Relations Actors in Jordan The industrial relations system in any country is an outcome of complex interaction between three actors: labor and its representatives, management as a representative of ownership, and the State. The influence of each actor on the system varies among countries and depends on a set of social, economical, technological, and political factors prevailing in that country. In Jordan, the State plays the important and decisive role in the industrial relations system. Its role overrides those of labor and management. A major part of that role is direct and predictable through its legislation and the power to enact new laws that govern the relationship among the actors. The other part is indirect and unpredictable through its political and economic pressure on the actors in the system. Most of the rules that control the interaction among the actors and the procedures to administer them in the industrial relations system in Jordan are stated in the labor law, thus allowing little room for the other actors to maneuver and to influence the system. Rules, such as union certification and representation, layoff, dismissal, dispute settlement process, third party intervention, overtime compensation, etc., are stated in the law. However, these rules were enacted in the Labor Law of 1961. Since then no change has occurred in the law in spite of the tremendous changes that have occurred in the labor

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market during the last three decades. Due to the incompatibility of these rules and laws with the developments in the labor market, an institutional gap has been created (Makhamreh, 1981), the solution of which requires new and modern laws to match these developments. There has been continuous effort in the last ten years to enact new labor laws, but nothing has materialized until now.

The Role of Management Management plays the second important role in the industrial relations system in Jordan. It is considered more powerful than labor due to its prerogatives to manage the workplace and due to the government tendency to favor management in dispute situations and legislation. Labor unions perceive that government sometimes represents business interests and that gives management the edge in influencing the industrial relations system more than labor (Makhamreh and El-Faleh, 1992). Management attitudes toward labor unions are not favorable. It can be generally described to range between controlled hostility and accommodation. In a very few cases it is cooperative (Allen and Kearveny, 1988:285). Employers in Jordan have the right to associate, and there is no restriction on the number of employer associations. In fact employer associations outnumber those of labor unions in Jordan. However, the role of employers' associations is to organize their associations and to serve the interests of their members. Their role in collective bargaining is limited because there are no wide bargaining activities across industries.

Labor Unions in Jordan Labor unions have been legally operating in the industrial life of Jordan for the last four decades. In spite of that long period of time, their impact on the industrial relations system in Jordan has been optimistically moderate. They play a lesser role in the industrial relations system compared to that of management and the government. In a recent study, fifty-three percent of labor leaders evaluated the impact of labor unions on the industrial relations system in Jordan to be generally weak, while only forty percent of them evaluated it to be moderately effective. However, the same study revealed that labor unions were successful only in improving slightly the working conditions and benefits and services to their memberships (Makhamreh and El-Faleh, 1992). Labor leaders in Jordan attribute their weaknesses primarily to government policies and the government's negative attitude toward unions. Insufficient financial resources and dependence on government financing, weak leadership,

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and lack of membership were also cited as factors contributing to that effect (Makhamreh and El-Faleh, 1992).

Unionization in Jordan There are seventeen certified labor unions operating in Jordan and representing labor in collective bargaining. Fifteen of those unions are craft (horizontal) unions that cut across many companies and industries, while only two of them are company (industrial, vertical) unions, including all workers in their particular companies (Flippo, 1980:378-379). In 1988 union membership in Jordan was approximately twenty-two percent of the total labor force. Seventy-two percent of all union membership belongs to one union (Commercial Drivers' Union) where membership is compulsory. Taking that into consideration we find that voluntary union membership is only six percent of the total labor force in Jordan. Statistics in Table 1 show that the rate of increase in union membership was the highest during the period of 1974-1976, a booming period in the history of the Jordanian economy (Central Bank of Jordan, 1976:44). On the other hand, union membership has not changed since 1985, a period in which a high rate of unemployment is prevailing in the economy. The Time Magazine of May 22, 1989 put the unemployment figure about 15 percent in Jordan, while the Wall Street Journal of January 23, 1990 put that figure to be 20 percent.

Structure of Labor Unions in Jordan A. The General Convention: It convenes every four years and is considered the highest authority of General Federation of labor unions. It includes all administrative members of all unions and is responsible for planning the general policy of the labor movement in Jordan for the coming period. B. The Central Council: It is composed of representatives of all unions proportionate to their memberships. The Central Council convenes once every month. It is responsible for executing the general policy drawn by the General Convention and takes over the functions of the General Convention after being convened. The Central Council elects the president, the general secretary, and the assistant general secretary for a two-year term. In 1988, the total members of the Central Council were one hundred seventy-one members. C. The Executive Committee: Composed of thirteen members elected by the Central Council from its members. The committee is presided over by the General Secretary, who is considered the legal representative of the General Federation of Trade Unions before the other parties. The committee's meetings

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Table 1: Union membership in Jordan during the period 1972-1988 Year

Number of membership

Percent change

1972 1974 1976 1978 1980 1982 1985 1988

34,846 42,638 61,753 72,134 84,384 90,730 132,911 132,911

22 45 17 17 8 46* 0

Source: General Federations of Labor Unions Records (1989: 75-76). * Change is for 3 years.

are held on a biweekly basis, and distributes work among its members according to their functional areas. D. Administrative Committee of National Unions'. Each of the seventeen unions certified in Jordan elect annually an administrative committee from all union members to run the general affairs of that union, and to help local affiliates in the different companies manage their affairs. E. Administrative Committee of Local Unions: Each local union is affiliated with its national union and elects annually an administrative committee from the local union membership in a particular company to represent that union in front of the management of that company. In the case of collective bargaining, a joint committee of the national union and the local union normally represent the local union in that process.

Labor Leadership in Jordan A recent study (Makhamreh and El-Faleh, 1992) has found the wide-spread belief that the labor leadership in Jordan is ineffective in handling labor problems and in positively contributing to the industrial relations system in Jordan. Much of that ineffectiveness is attributed to the quality of the labor leaders. They are divided, uneducated, and seek personal gains rather than gains for the rank and file. Only twelve percent of the labor leaders in Jordan have a university degree. Labor leaders in Jordan are mostly elected because of their family connections or ideological orientations rather than qualifications and dedication to serve labor interests (Makhamreh and El-Faleh, 1992).

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Figure 1 : Structure of labor unions in Jordan

Current Trends in Industrial Relations in Jordan The relationship between labor and management in Jordan during the last five years has been in a state of accommodation, with labor willing to maintain the status-quo or even to give up minor concessions to management. This situation is due to the declining power of labor unions because of membership stagnation and the high level of unemployment prevailing in the economy. Government on the other hand has been trying to prevent further increases in the unemployment rate. It interferes directly and indirectly with management to stop or delay layoffs. Management has been responding positively to that end, but the question is, until when?

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If the present situation continues, more layoffs will ultimately occur and that will create a problem not to management but to the government in the form of social unrest. However, if the economy recovers and gains in employment are achieved, then we will see a better climate for labor to play an increasing role in the industrial relations system in Jordan, especially with the recent signs of democratization in the political arena. Of course, the recent conflict with Iraq in the Persian Gulf had a very negative effect on Jordan's economy. Recovery from this is likely to take a very long time, greatly increasing the potential for social unrest. However, government will maintain its dominant role in the industrial relations system in Jordan for the foreseeable future.

References Allen, R. E. and T. J. Kearveny (1988) Contemporary Labor Relations. Reading, MA: Addison-Wesley Publishing Company. Al-Quamari, M. (1982) Labor Movement in Jordan for 1950-1970. Amman: Co-operative Press Workers Association. Central Bank of Jordan (1976) Annual Reports. Amman: Central Bank of Jordan Press. Flippo, E. B. (1980) Personnel Management. New York: McGraw-Hill Book Company. Jawhar, M. (1972) Labor Movement in Jordan. Amman: Al-Safadi Press. Makhamreh, M. (1981) "Determinants of Labor - Management Disputes and Their Settlement in the Private Sector in Jordan". Unpublished Ph.D. Dissertation, Ohio State University. Makhamreh, M. and M. El-Faleh (1992) "The State of Labor Unions and Their Role in the Industrial Relations System in Jordan". Unpublished paper.

Korea Michael Byungnam Lee

The understanding of a nation's industrial relations system is not possible without the knowledge of its historical origin, the political ideology and the power relationship among the government, employers, and the workers, and the economic and social development stages (Dunlop, 1977:7-18). In this chapter on South Korean industrial relations system we will first review South Korea's history, politics, and economy. Then we will discuss the roles of each of the actors in industrial relations: the government, employers, and the unions. Then the interactions among these actors within the specific South Korean environment will be discussed. The final section will discuss the most recent events and an attempt will be made to forecast the future of the South Korean industrial relations system.

Institutional Arrangement and the Role of Government The Land, History, and Politics The Korean peninsula is located with borders with China in the North and the Soviet Union in the Northeast. Across the Yellow Sea it faces Central China, and across the Korea Straits lies Japan. This strategic location helped Korea absorb diverse cultures from its neighbors, but also made it vulnerable to foreign invasion. Once a dominant force in Northeast Asia with its territory stretching to the north covering the entirety of Manchuria, and competing with China, the Korean people settled in the peninsula when Silla unified the other two kingdoms of Koguryo and Baekje in AD 668.' Since then, for over 12 centuries, the Korean people have maintained an independent nation which lasted until the Japanese colonialization (between 1910 and 1945), making it the second oldest independent nation in the world after China (Reischauer, 1986:67). The Korean War (1950-53) further divided the peninsula and resulted in the People's Democratic Republic of Korea in the North and the Republic of Korea in the South. Korea is a small country in terms of area - 221,362 square kilometers or about 86,500 square miles. It is about the size of the United Kingdom. South Korea alone has 99,222 square kilometers or 38,310 square miles and its size is

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about a quarter of that of California or Japan. Korea, though, is a large country by population: 42 million in South Korea and 22 million in North Korea by 1989 (Ministry of Labor, 1991:20). As a result, South Korea is the third most densely populated country in the world. Many scholars have attributed the economic development of Korea and several other East Asian nations to the Confucian ethic. The core of Confucianism focuses on the maintenance of proper relationships between the king and his subject, father and son, husband and wife, the young and old, and friends through loyalty, filial piety, obedience, respect, and trust. These major values resulted in the following characteristics: an emphasis on education, the leadership of government, consensus formation, the East Asian management style, and the entrepreneurial spirit or work ethic (Song, 1990:49). Over the years, these Confucian traditions have been combined and modified by Western Christian ethics to form the "new Confucian ethics", an amalgam of family or collectively-oriented values of the East and the pragmatic, economic-goal oriented values of the West (Tu, 1984:110-111). The modern political system in South Korea was established in August, 1947, after two years of U.S. military governance after Korea was liberated by the allied forces from Japan in August, 1945. Following the establishment of the Republic of Korea in the South, the Democratic People's Republic of Korea, a Communist government was separately established in the North. Especially since the Korean War (1950-1953), the South-North conflict has made the Korean peninsula one of the most volatile and potentially explosive regions in the world. Most recently, the South-North conflict has somewhat eased down as the two Koreas have separately gained the membership to the U.N. in fall 1991 and subsequently signed a non-aggression pact. The modern political history of South Korea can be divided into six consecutive regimes, beginning in about 1947 - each marked by some degree of political unrest yet economic development. In spring 1991 the ruling Democratic Justice Party won the national election for provincial self-government with a large margin. Subsequently the opposition leaders consolidated themselves and formed a new party to prepare for the 1992 presidential election. The new reunification movement together with the results of the 1992 presidential election will shape South Korean politics for the rest of the 1990s.

Labor Market Korean economic growth has been accompanied by extensive investment in human resources. The amount of total expenditure on education has exceeded 10 percent of GNP and together with the United States, South Korea is viewed as the world's leader in human capital formation (Song, 1990:62).

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As the economy grew and experienced structural change, the employment opportunity has shifted from agriculture, forestry, and fishery sectors to the manufacturing and service sectors. In 1970, more than half of the employment was in the former, while by 1989 the service sector employed more than half of the workforce. Recently, several experts have begun to express concern for the shift of employment from the manufacturing to the private service sector, which is viewed as one of the causes of the poor export performance since 1989. While 34.6 percent of 18.5 million people employed in 1990 were blue collar production and production-related workers, about 8.5 percent were professional, technical, administrative, and managerial workers, which has grown from 3.5 percent in 1962. The labor force participation rate has been very stable at upper 50 percent level since 1963 to exceed 60 percent in 1990. During the 1980s, the labor force participation rate for males has been stable at low 70 percent level, while females have recorded low to middle 40 percent level. The female proportion of total employment in 1990 was about 32.5 percent. Can South Korea still compete with other NICs (Newly Industrializing Countries) in terms of wage? Including the so-called Four Dragons (South Korea, Taiwan, Hong Kong, and Singapore), the wage level in South Korea is higher than any other NIC except Taiwan. In manufacturing, the situation is very similar. Thus, unless the South Korean economy develops new technology and moves into high value-added manufacturing quickly, it will soon lose price competitiveness to other countries such as Thailand, Malaysia, and Indonesia.

L a b o r L a w s and the Role of G o v e r n m e n t The constitution guarantees workers the basic labor rights: the right to organize; the right to bargain and act collectively; and freedom in the choice of occupation (Ministry of Labor, 1988). However, it also provides a base to restrict trade union activities of national and local government employees including police and teachers, and workers in defense industries. Currently there exist 12 laws that affect employment relations in South Korea (Ministry of Labor, 1989b). These laws can be categorized into five groups: a) labor-management relations; b) minimum work standards; c) equal employment opportunity; d) employment security and manpower training; and e) occupational safety and health and workers compensation. Detailed discussions will be focused on the four labor relations laws and the Labor Standards Law. The four major laws that deal with labor-management relations are: Trade Union Law, Labor Dispute Adjustment Law, Labor Relations Commission Law, and Labor Management Council Law. Except for the Labor Management Council Law of 1980, all the other three were enacted in March, 1953, during the Korean War. The substance of the 1953 laws came very close to guarantee-

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Table 1: Summary of Korean labor relations laws Law

Year Enacted (Most Recent

Major Provisions Amendment)

Trade Union Law

1953 (1987)

Defines procedures to form unions and to conduct collective bargaining. Defines unfair labor practices and relief procedures. Applies to all employees in private sector and selected public sector employees.

Labor Dispute Adjustment Law

1953 (1987)

Establishes agencies and procedures for the settlement of labor disputes.

Labor Relations Commission Law

1953 (1984)

Establishes the Commission and its role for the settlement of labor disputes.

1980 (1987)

Defines the role of the Council to be established in the unionized firms and nonunion firms with 50 or more employees.

Labor Management Council Law

ing full-fledged trade union rights (Park, 1988:20). Since then, however, all these laws have been amended several times or put under emergency presidential decrees in the direction of further restricting labor movement. After the Great Labor Struggle of 1987, 2 however, all the four labor laws for the first time since their original promulgation were progressively amended on November 28, 1987. Trade Union Law. The Trade Union Law is the most comprehensive and important labor law and is composed of six Chapters and 50 Articles. The law deals with the regulations of trade union activities, establishment of unions, internal union management, collective bargaining procedure, management of unfair labor practice, and penal provisions. In Chapter I, the law defines a trade union as "an organization or a federation of the organizations, which is voluntarily formed at the initiative of laborers for the purpose of maintaining and improving working conditions and enhancing welfare and socio-economic status of the workers" (Article 3), and "no one other than the trade unions pursuant to this law shall be entitled to report for adjustment of labor dispute or to apply for the relief prescribed" (Article 7). While Article 3 allows those

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workers who are contesting the validity of dismissal to be interpreted as laborers, it prohibits formation of a new union to contest an already existing one for the same bargaining unit. Article 8 restricts the formation of a union by public officials. The most controversial provisions of the Trade Union Law are Article 12, which prohibits unions' political activities and Article 12-2, which prohibits interference by a third party. Article 12-2 was inserted in the law in 1980 to prevent religious and human rights organizations such as the Urban Industrial Mission and so-called radical activists to assist the union movement. The 1987 amendment allowed the Federation of Korean Trade Union (FKTU) and the officially recognized industrial federations to not be regarded as the third party. However, this provision still puts unions in an inferior status compared with the well-financed and well-staffed management by limiting the unions' access to outside assistance for expertise in establishing a trade union and conducting collective bargaining. Similar but even more restrictive provisions are also found in the Labor Dispute Adjustment Law (Article 13-2) and Labor-Management Council Law (Article 27). The current Trade Union Law does not require a certain number of employees or even an election to form a union. However, the law practically does not allow an independent union that is not affiliated with any of the industrial federations that are recognized by the government. Those who want to establish a new union must submit a report not only to the administrative authorities but also to the federation to which the union is affiliated. Thus, in practice, it is a precondition for a union establishment that the local first obtain a written recognition from the appropriate industrial federation. By receiving a certificate of report from the administrative authority within three days, the union becomes a legal entity. However, the administrative authorities (Ministry of Labor or local government) may delay or refuse to issue the certificate according to Article 8 of the administrative decree (Chang, 1988:156). A union local must hold a convention at least once a year and federation of unions at least once every three years (Article 18). A trade union may install a council of delegates but the delegates must be elected by union members through direct secret unsigned balloting (Article 20). The executive officers must be elected by and from among the bona fide union members and the term of officers cannot exceed more than three years (Article 23). Chapter III gives power to the representative of the union or those who are duly authorized by the union including the industrial federation to negotiate for a collective agreement with the employer or employers organization which has the authority to adjust or regulate its member employers concerning matters related to labor. It also requires the employers to conduct good faith bargaining (Article 33). However, the contract becomes legally valid only after the administrative authority receives the signed contract and approves it (Article 34). The duration of contract is also fixed by the law: maximum one year on wage and two years

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for other matters (Article 35). Even though the union is given the authority to bargain collectively with the employer, the resulting contract does not necessarily apply to all the employees unless the union represents a majority of the employees in the bargaining unit (Article 37). Chapter IV of the Trade Union Law specifies only the employer unfair labor practices: 3 (1) dismissing or discriminating against employees based on their joining or organizing a union and justifiable union activities; (2) discrimination to encourage or discourage union membership except where a union shop clause is in effect, which is legally allowed only when the union represents more than two-thirds of employees in the bargaining unit. However, the employer is not allowed to dismiss those employees who have lost union membership by the union sanction. 4 (3) Refusal to bargain in good faith with the legal representative of the union; (4) controlling of, interfering with, or subsidizing financial support of the union; and (5) discrimination against employees for filing charges or giving testimony against the employer. The Article 40 through 44 establish the procedure for relief from the employer unfair labor practice. The affected employee or the union may request for the relief to the Labor Relations Commission within three months of the occurrence of the unfair labor practice. Having received an application of relief, the commission must undertake an investigation and may issue an order to the employer to desist or turn down the application. Either party involved may request a reconsideration to the Central Labor Relations Commission, and if not satisfied then may file a suit according to the Administrative Litigation Law to the court for the final decision. Also the validity of the commission's decision at any level is not suspended during the next stage process of appeal. The penal provisions are provided in Chapter VI. The most stringent penalty is specified for the case of an unfair labor practice relief order. When the employer fails to abide by the commission's relief order, he or she will be sentenced to imprisonment for up to two years or a fine up to 30 million won (or about 43,000 U.S. dollars). Labor Dispute Adjustment Law. The Labor Dispute Adjustment Law is composed of 8 Chapters and 49 Articles which provide the mechanism for resolving disputes between labor and management over both interest issues (disputes over new contract) and rights issues (interpretation and administration of current contract). The parties are required to notify the administrative authorities and the Labor Relations Commission about the existence of disputes and no "acts of dispute" such as strike, sabotage, and lockout are allowed to begin until the 10-day cooling off period (15 days for public utility) passes. The law's jurisdiction extends to all industries including public and defense industries and also government employees. The law requires majority votes by the members before the union starts to engage in acts of dispute. However, the law prohibits acts of disputes by employees of national or local governments and defense industry specifically designated by the Special Law concerning Defense

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Industry (Article 12). It also gives the administrative authorities such as Minister of Labor, mayors of Seoul and other directly controlled cities and provincial governors, the power to order suspension of violent acts even prior to the Labor Relations Commission's (LRC) decision. On the other hand, employers are not allowed to hire temporary or permanent strike replacements during the period of dispute. The law specifies four types of compulsory dispute resolution mechanisms: conciliation, mediation, arbitration, and emergency adjustment. The LRC is responsible for the first three and the Minister of Labor has the decision making power for the emergency adjustment case. Labor and management, though, may voluntarily enter into conciliation, mediation, or arbitration as long as they notify the LRC. In case the Conciliation Commissioner appointed by the chairman of the LRC fails to settle the dispute, the LRC immediately undertakes mediation. A mediation committee is composed of three commissioners among the tripartite LRC members, each representing labor, management, and the public with the latter becoming the chairman of the committee. The mediation committee prepares a draft mediation and presents it to the parties as a recommendation. The committee functions like a fact finding committee in the sense that they may publicly announce their mediation draft through the press. Once the parties accept the mediation but disagree on some detailed interpretations of the draft mediation, the mediation committee has the final say on it, which has the same effect as the arbitration decision. Both interest and rights issues may be arbitrated by the LRC at the voluntary joint request of the parties or by the provisions in their labor contract. Further, mandatory compulsory arbitration is required in the case of public enterprise 5 when the LRC by itself or at the request of the administrative authority decides to refer a dispute to arbitration. Once the dispute is referred to arbitration, no act of dispute is allowed for 15 days. The decision by the three-member arbitration panel composed of the members of the LRC is final and binding unless the arbitration award is in violation of the law or is an act going beyond its authority. In that case, a party may request the Central Labor Relations Commission to review the arbitration award, and then finally may file a suit according to the Administrative Litigation Law. The arbitration panel's decision and the subsequent decision by the Central LRC is not suspended by the review request or legal suit. The last form of dispute resolution is the emergency adjustment, which is under the jurisdiction of the Minister of Labor. If the minister decides that a dispute may impair the national economy or endanger the daily life of the general public after hearing the opinion of the Central LRC and makes the announcement, the parties concerned must immediately suspend any act of dispute and they may not resume unless 20 days have elapsed from the date of announcement. The Central LRC undertakes a conciliation and may decide to refer it to arbitration. Chapter VIII provides the penal provisions. For example,

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the government and defense industry employees who undertake acts of disputes may be imprisoned up to five years and fined up to 10 million won (or about 14,000 U.S. dollars). Labor Relations Commission Law. This is a sister law to the Labor Dispute Adjustment Law. It is composed of 6 Chapters and 23 Articles, which established the Labor Relations Commission (LRC), the agency which operates the procedures specified in the Labor Dispute Adjustment Law. The LRC is established at three levels: central, local, and special. The Central LRC is established in the Ministry of Labor, the Local LRC in large cities and provinces, and the Special LRC in a specific ministry of the national government. When a labor dispute occurs, the LRC has the exclusive right to act, to investigate, and to make decisions. However, in cases of employer unfair labor practice, unlawful union charter and resolution under the Trade Union Law, claims for damages and examination or arbitration under the Labor Standards Law, and interpretation of the instructions of the Central LRC, only the public members of the LRC have the power to make decision (Article 20). Labor-Management Council Law. Virtually all business enterprises with more than 50 permanent employees and all unionized firms, regardless of the number of employees, are required to form a Labor-Management Council for the purpose of improving employees' welfare and healthy development of the enterprise through cooperation between employees and the employer. A council is composed of the equal number (between 3 and 10) of employee representatives who are elected by the employees without the employer's interference, or if unionized, by the union representatives, and the chief executive officer and/or others who are designated by the CEO. The council elects its own chairperson and must meet at least once every three months. The council should not affect collective bargaining and other union activities in case the firm is unionized. There are two major functions of a council: consultation and employer report. The council is required to consult on the following subjects: (1) improvement of productivity and promotion of employee welfare; (2) employee education and training; (3) prevention of labor disputes; (4) grievance handling; (5) safety and health; (6) improvement of personnel and labor management system; and (7) other matters on labor-management cooperation. Employers are required to report to the council in good faith on matters regarding: (1) overall management plans and actual results; (2) quarterly production plan and actual results; (3) manpower plan; and (4) economic and financial situation of the enterprise. Virtually all union and nonunion enterprises must maintain grievance handling members of three or fewer representing both labor and management. If the firm has a council, it will elect the grievance committee. The council will make final decisions on cases which are not resolved by the grievance committee. It is viewed that the requirement of the labor-management council has resulted in a

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dual system of employee representation, which not only reduced union power but also gave management bargaining initiatives. Labor Standards Law. This is the most extensive labor law that is composed of 12 Chapters and 115 Articles, which applies to all establishments including government agencies which employ five or more regular workers. Some provisions such as severance pay, though, do not apply to those establishments with more than five but fewer than 10 regular employees. This law provides the basic minimum standards of labor which prohibits discrimination based on sex, nationality, creed or social status (Article 5), forced labor, violence, and exploitation (Article 6-8), discipline without just cause (Article 27). The law also requires 30-day advance notice of dismissal, dismissal pay of the amount equal to or more than 30 days of the normal wage without advance notice (Article 27-2), retirement allowance system to provide at least the amount equal to or more than 30 days of the average wage for each year of continuous employment (Article 28), and allowance for laid-off workers during the plant closing period at least at 70 percent of the average wage (Article 38). The Articles 34 and 35 used to have provisions on minimum wage, but were replaced by the Minimum Wage Law, enacted in 1986. Under the Minimum Wage Law, the Ministry of Labor publishes the minimum wage before the end of November each year to be effective during the following year. In 1990, it was 165,600 won (about 236 U.S. dollars). Another strongly protective clause of this law is that wages for the last three months, retirement allowance, and industrial accident compensation must be liquidated in preference to the tax, public levies, or even those claims against the property of the employer secured by a security or mortgage (Article 30-2). The law also requires employers to allow one day paid-leave per month (Article 47) and 10 days paid-leave for one full year's service without absence. The law provides strong protection for minors and females (Chapter 5). It prohibits child labor by minors under age 13 and females and minors under the age 18 from work detrimental to morality or harmful to health. Female workers should be allowed one day paid-leave per month for menstruation and pregnant female workers must be given 60 days paid maternity leave including at least 30 days after the child birth. Employers are also required to pay travel expenses for female or minor employees under age 18 for their holiday homecoming. Employers with more than 30 employees under age 18 must also provide educational facilities or scholarships. The Chapter 6 specifies safety and health regulations, Chapter 7 provides apprenticeship clauses, and Chapter 8 provides procedures for compensation for work related accidents. The Chapters 9 and 10 specify employer responsibility for work rule posting and on-site dormitory rules. The Chapter 11 gives the labor inspectors who are appointed by the Minister of Labor the police power for inspection of the establishment and investigation of violation of the law along with the public prosecutors. Despite its strongly labor protective nature,

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historically it has been argued that the Labor Standard Law has not been enforced to its words but selectively applied at the administrative convenience.

Union and Management Labor Movement and Labor Unions It was about the 18th century when wage earners began to appear in Korea. The early labor movement was led by mainly mine workers and dock workers (Kim and Kim, 1980:9-10). The first labor union recorded is the Sungjin Dock Workers' Union which was established in May, 1898, with 46 members (Federation of Korean Trade Union, 1979:15). It was toward the end of the 19th century when a factory system started to be established in Korea. The Japanese capitalistic expansion led to its annexation of Korean peninsula in 1910 and it in fact propelled the introduction of modern production system and resulted in the increase of factory workers and labor organizations. However, on the other hand, the Japanese colonial economic policy in Korean peninsula helped to shape the labor movement as a nationalistic independence movement. The acts of labor disputes were regarded as a patriotic struggle against the Japanese colonial industrialists. As Japan invaded Manchuria in 1931 and started to further tighten its oppressive rule, labor unions had to go underground until Korea was liberated in 1945. Labor disputes during the colonial period increased steadily over the years reaching 170 per year by the early 1930s, then about 100 per year until 1945. Following the end of the World War II and liberation of Korea in August 15, 1945, labor unions started to regain their strength. The first national trade union federation, Junpyung (General Council of Korean Trade Unions) was formed on November 5, 1945 with the leadership of nationalistic Socialists and members of left-wing political parties. Even though Junpyung enjoyed a wide spread grass root support through its 13 industrial federations covering the entire Korean peninsula, the labor movement was soon divided by political pressure. The U.S. Military government that was ruling the Southern half of the Korean peninsula tried to implant the American style business unionism focusing on immediate economic gains through collective bargaining. Also in effort to counter the leftist Junpyung, business and pro-American right-wing politicians led to form a conservative union federation, the Daehan Nochong (Federation of Korean Trade Unions - FKTU), in March, 1946 without much support from rank and file working class. In March, 1947, Junpyung and the Communist Party in South Korea were outlawed by a decree of the U.S. Military government and went underground until they were totally dismantled later.

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As the Republic of Korea was established in the southern half of the Korean Peninsula in August, 1948, Daehan Nochong became the sole trade union federation in South Korea. During the decade of the 1950s, Daehan Nochong continued to remain close to business interests and was virtually dominated by the Syngman Rhee government and the Liberal Party. Together with the Rhee government's political control of the Daehan Nochong, corrupt union leaders and business-dominated establishment-based unions resulted in the rank-and-file resistance and formation of the independent union federation, Nohyup (Council of Trade Unions) in 1959 (Park, 1979:41). After the April 19 Student Revolution in 1960, Daehan Nochong and Nohyup agreed to be merged into Hancock Noryon, still based on enterprise and craft unionism. During the period of May, 1960 to April, 1961, 280 new unions, or 50 percent of the previous year's number of unions were formed. By April, 1961, the total number of unions reached over one thousand with union membership of 356,692 (Park, 1979:43). The military coup of May 16, 1961, led by General Park Chung-Hee banned all labor organizations and ordered to form a new labor federation along the industrial line instead of crafts and establishments. In November, 1961, Hancock Nochong (or just Nochong, Federation of Korean Trade Unions - FKTU) was formed by 11 industrial federations and it remains until today to be the only legally recognized labor union confederation. 6 South Korea in the 1960s was an almost unique example of unparalleled economic development and industrialization, on the one hand, and progress in labor movement and collective bargaining, on the other hand (Ogle, 1981:505). Even though the union autonomy continued to be absent and union's ability to strike and to undertake political activities were restricted, many view the decade of the 1960s as a period when genuine collective bargaining was allowed to function. The number of local unions grew from 1,526 in 1962 to 3,063 in 1970. During the same period, union membership increased from 176 thousand to 473 thousand and unions became engaged in collective bargaining at national, regional, and also at the plant level (Bognanno and Kim, 1982:195-197). In December, 1971, right after narrowly winning the presidential election for his second term, which was widely criticized for fraud and vote rigging, President Park declared a state of emergency and issued the Special Law on National Security. This decree suspended the Labor Disputes Adjustment Law and required unions to obtain government approval before wage negotiations, and it further prohibited all acts of labor disputes. The subsequent Yooshin Constitution of 1972 allowed presidential decrees to dictate all labor relations matters. For example, by allowing a delegates' convention to substitute for the membership meeting, the government could effectively control the union leadership, but further alienated the rank and file members and weakened the base of the union power. Even though the South Korean economy continued to grow during this period and union membership grew from 473,000 to 948,000 between 1970 and 1980,

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256 Table 2: Trend of labor union membership

1962 1965 1970 1975 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Union membership (in 1,000) ( % increase from previous year)

Number of industrial federations

Number of unit unions* (% increase from previous year)

Unionization rate** (%)

176 302 473 750 948 ( - 1 2 . 9 ) 967 (2.0) 984 (1.8) (0.4) 988 1,011 (2.3) 1,004 ( - 0 . 7 ) (3.2) 1,036 (22.3) 1,267 1,707 (34.7) 1,932 (13.2) 1,887 ( - 2 . 4 )

14 16 17 17 16 16 16 16 16 16 16 16 21 21 21

1,526 2,205 3,063 3,585 2,618 2,141 2,194 2,238 2,365 2,534 2,658 4,086 6,142 7,380 7,698

7.6 11.2 12.4 14.8 21.0 20.8 20.2 19.4 18.1 16.9 16.9 18.1 19.5 19.7 18.4

(-18.2) (2.5) (2.0) (5.7) (7.1) (4.9) (55.6) (51.0) (20.2) (-2.4)

Source: compiled from Ministry of Labor (1989 a, 1990, 1991) and Federation of Korean Trade Unions (1979). * The figures for the years prior to 1980 are the total numbers of branches of all local chapters. Due to the amendment to the Labor Union Law, all local chapters and branches were merged into unit (enterprise) unions as of December 30, 1980. ** Unionization Rate = union members as percent of non-farm workers except managers and government employees.

unions were virtually prohibited to exert any pressure toward the management to improve the welfare of their members. The labor relations status of this period was described as "unionism without collective bargaining" (Bognanno and Kim, 1982). While the nation experienced economic growth, the gap in income distribution became a serious issue and the lax enforcement of the Labor Standard Law resulted in poor working conditions especially in smaller firms. Frustrated workers criticized the F K T U and independently went into acts of dispute with the support of church organizations such as the Urban Industrial Mission. The most significant event was the self-immolation by Chun Tai-Il on November 13, 1970. Chun Tae-Il was a 23-year-old garment worker when he set himself alight holding a book of Korean labor law, shouting "Observe the Labor Standard Law, do not make my death futile!" (FKTU, 1979:788). His death was

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followed by several other self-immolations, hunger strikes, and protests. These tragic events vividly revealed the frustration of the workers and the contradiction in South Korean industrial relations system that alienated the labor from its share of the fruit of the economic progress. The 1980s which started with the end of the Park regime, but quickly followed by another coup by General Chun, did not turn out to be a better period for industrial relations. Right after the fall of Park, as the nation was experiencing a brief period of democracy, labor had a chance to voice its long oppressed demands and it resulted in 407 labor disputes, a sharp increase from 105 in 1979. However, soon again, the labor laws were amended by an emergency legislative body, all appointed by those who were in power during the martial law period. The major amendment effectively restricted the establishment of unions and their normal activities. The existing unions were reshuffled to be organized by establishments, thus further making the industrial federations powerless. Scattered labor disputes by taxi drivers, steel workers, garment workers, food workers, and others were often met by the clubs of so-called Kusadae, a mob hired by the company. By mid-1986, a growing number of labor and supporting groups in South Korea were calling for international support and recognition as the government campaign against labor activists became intensive. All these events eventually led to the Great Labor Struggle of 1987. During the three months after Rho's Democratization Declaration, more than 3,500 labor disputes erupted. This was an alarming record compared with the total of 1,979 disputes during the 12-year period of 1975-1987 and industrial relations in Korea were observed to be at a historic turning point (Bognanno, 1988). During this period, about a thousand new unions were formed (3,000 by December, 1989:10). These newly formed democratic unions and the traditional unions with new leadership were disillusioned with the Nochong, the FKTU, and formed their own committees or federations. By December, 1988, they organized nine Regional Councils of Democratic Trade Unions and eight industrial union federations. These regional and industrial union federations formed the Junnohyup or the Korea Trade Union Congress (KTUC) on January 22, 1990, with about 600 affiliated unions and 190,000 union members. The government characterized Junnohyup as "radical labor movement which denies the fundamental rules of liberal democracy" and waged a series of negative media campaigns and arrested the major leadership. However, as of June, 1990, Junnohyup still maintains a significant power with about 520 local affiliates and 160 thousand members (Korea Labor Institute, 1991:45). Even though the Korean government and business still are not recognizing Junnohyup as a lawful union confederation, it seems that Junnohyup is accepted by many workers, especially those of smaller companies as an alternative to Nochong, as the leader in labor movement.

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In addition to Chonnohyup, there exists the Union Federation by Trade which is composed of trade based union federations that represent teachers, lecturers, reporters, hospital workers, professional and research workers, clerical and financial workers. Except for the Union Federation of Insurance, Union Federation of Clerical and Finance Worker, all the others are operating without the government's official recognition. Currently the membership includes 589 unions with over 170,000 people (Korea Labor Institute, 1991:46). Most recently, in December, 1990, leaders of the 16 largest labor unions that represent the big companies such as Hyundai Heavy Industry, Daewoo Shipbuilding, Deawoo Motors, Seoul Subway, POSCO (pulled out later), etc., formed the Yondeahoei, independent from FKTU, to complement Chonnohyup that has been leading the labor movement since 1987 but limited to small size establishments. On February 14, 1991, seven Yondeahoei leaders were arrested with the charge of violation of prohibition for interference by a third party, the Article 13-2, the Labor Dispute Adjustment Law (Dong-Α Ilboo Daily, February 14, 1991). Another major union federation that failed to get government's official recognition is Chunkyojo (Korean Teachers and Educational Workers' Union). It was formed on May 28, 1989 with about 20,000 elementary and high school teachers nationwide. By February, 1990, 76 teachers had been imprisoned and 1,600 teachers had been fired and about 2,500 had been transferred to remote villages and islands, and its membership had been reduced to about 12,000 (National Education Association, 1990:5-6). In its Sixth Convention of 548 delegates on February 26, 1991, Chunkyojo claimed that it regained membership to 30,000 and 73 percent of their delegates are currently employed teachers. As of December, 1990, FKTU had 21 industrial federations and 7,980 locals with about 1,887,000 members. The largest industrial federation is the Federation of Korean Metal Workers' Trade Unions with 1,526 locals and over 430,000 union members. Time will have to pass to see whether Junnohyup, Chunkyojo, and other independent industrial federations can obtain the government recognition and either openly compete with Nochong or merge with it to form a true national union confederation such as DGB in Germany, LO in Sweden, or the AFL-CIO in the U.S.A..

The Role of Employers: With the Focus on Chaebols Recently it has been argued that, even though the strong government economic planning played the major role for economic growth in South Korea, the real catalyst to success was the efforts of the private business sector, especially for those of chaebols (Yoo and Lee, 1987:95-1 IO).7 A chaebol refers to a business conglomerate in South Korea, which began to form in the late 1950s (Hyundai, Samsung, Lucky-Goldstar), accelerated in the 1960s (Hanjin, Korea Explosive,

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Hyosung, Ssangyong, and Dong-A) and the early 1970s (Daewoo, Sunkyung, Lotte, and Kolon) to facilitate the rapid economic growth through various government special treatments (S. M. Lee, 1989:182). Eleven South Korean companies were listed in the Fortune Global 500 list in 1990, all of which are chaebols or major companies of chaebols. The largest is the Samsung chaebol, world rank 20, with over 35 billion U.S. dollars in sales, over 500 million U.S. dollars in profit, and over 170 thousand employees. The second largest chaebol is Deawoo, the third Sunkyung, which is followed by Ssangyong, POSCO, etc.. The top ten chaebol as a group recorded over 100 billion U.S. dollars in sales or about 50 percent of South Korean GNP in 1989 (Fortune, July 30, 1990:298). Korean firms are generally not different than American companies, for example, in opposing unions. They use various methods of union avoidance tactics. While some organizations adopt extreme, sometimes violent methods of preventing or limiting union activities, some others adopt rather more conciliatory approaches. Chung and Lie (1989:224) studied 18 large manufacturing companies and classified the companies into two groups: companies with relative labor peace vs. companies with frequent labor disputes. Among other things, the authors found that those companies that had relatively peaceful labor-management relations paid closer attention to the importance of human resource management and treated their employees with respect. As a result, the employees of these companies feel more positive about their jobs, compensation, human relations, communications, labor-management relations, and so forth than those of dispute-prone companies. Samsung, the largest chaebol in South Korea is known to have the most sophisticated proactive human resource management system. At the same time, it is widely known that for 52 years since its establishment Samsung has maintained the "no union for any cost" policy. To prevent unionization, Samsung has maintained very rigorous selection, training, and internal promotion programs with pay above the industry average. While practicing a progressive human resource management, Samsung is also known to have been engaged in both legal and illegal anti-union tactics like many other employers. Reported examples include encouraging a group of pro-company employees to submit a union formation report to the administrative authority to preempt the formation of a genuine labor union that is supported by the majority of employees. Currently among 27 Samsung chaebol companies only four have labor unions and among them only the union at Central Daily Newspaper is active (Hangyorae Shinmoon Daily, July 10, 1990). Most of South Korean firms' labor relations policies are based on the dominant managerial values of loyalty, cooperation, and harmony. Especially with the virtual lack of history of genuine collective bargaining, firms find it very difficult to deal with the newly emerging democratic unions which have genuine rank and file support. South Korean firms still need to learn that

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genuine industrial peace can be achieved only by acknowledging the underlying inherent conflicts between labor and management and resolving it through negotiations with unions that truly represent their employees. Disguised harmony and imposed industrial peace can be even worse than the surfaced confrontation. There exist several management organizations. The most influential among these are the Korean Chamber of Commerce and Industries and the Federation of Korean Industries. Both of these are involved in political lobbying for business, collecting data, conducting research, and consulting services to member organizations on general management problems and labor relations issues. The Korean Federation of Employers' Association deals mainly with labor issues and frequently serves as the employers' counterpart organization vis-à-vis the Federation of Korean Trade Union. 8 Most recently, out of a public relations effort, it adopted a "business ethics rule" for member companies. On December 23, 1989, with the encouragement and support of the government, the Kyungdanhyup was organized by the large companies to deal effectively with the FKTU and Junnohyup by forming a common front for the business interest.

Nature of Labor Management Relations Bargaining Structure and Scope Labor-management relations in South Korea can be generally characterized as confrontational. This reflects the deep-rooted suspicion of labor against management's traditionally paternalistic but authoritative labor relations practices and the inconsistent government policy in enforcing the labor laws. The lack of bargaining experience between labor and management also led to the quick escalation of conflicts into various forms of labor disputes. According to a survey conducted by the Korea Labor Institute more than 60 percent of labor disputes during 1987-1988 were in the form of "act first, negotiate later" tactics (Kim, 1990:21), in which unions engaged themselves in sit-ins and slow-downs even before the official start of the bargaining to induce the management into a serious negotiation and also to show leadership's determination to the rank and file members. The bargaining structure is characterized by enterprise level negotiations. Even though FKTU and Junnohyup propose a general wage increase guideline for their affiliated unions, the actual negotiations occur mostly at the local level. Some multi-employer bargaining has been done in transportation, mining, and textile industries. The bargaining at a company of a major chaebol can be very complicated because both the internal (other companies of the same chaebol)

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and external (other firms in the same industry) comparisons are made. Pattern bargaining is not uncommon. While South Korean labor laws are rather vague on the specifics of the scope of bargaining, a lot of potential bargaining subjects are predetermined by law. On the one hand, there are no clear cut distinctions, for example, among mandatory, permissible, and prohibited subjects. On the other hand, the Trade Union Law puts a specific limit on contract duration: one year on wage, two years maximum on other items, thus taking it out of negotiation. Furthermore, as we have reviewed in the previous section, the Labor Standard Law provides extensive management requirements on wage, hours, pension, layoff, and other working conditions. The most controversial subject in bargaining is whether the union has a right to participate in decision making processes on personnel and managerial issues. The 1988 Korea Labor Institute survey showed that 67 percent of employers regarded managerial and personnel policies as management prerogatives. On the other hand, 75 percent of workers surveyed wanted those items to be included in the scope of collective bargaining. On this issue and others, the government has put pressures not only on unions but also on management. For example, in a recent meeting with the executives of the 30 largest companies, the Assistant Secretary of Commerce demanded that during the upcoming bargaining rounds companies adamantly adhere to the principle of the exclusion of union participation in personnel and managerial issues, no payment during strike, and the wage increase within one digit. Further, he warned that the companies that fail on these issues will be excluded from special government strategic funding support (Dong-Α Ubo Daily, February 15, 1991).

Incidence and Characteristics of Labor Disputes As was discussed previously, the confrontational characteristics of labormanagement relations in South Korea originates from the anti-Japanese nationalistic independence movement since 1910. Incidence of severe labor disputes seem to have high correlation with some major political events. For example, in 1987 the nation experienced an explosion of labor disputes (3,479 cases compared with 276 in 1986) following the popular democracy movement and the ruling party's concession. The most popular form of dispute acts are refusal to work, sit-in strike, and picketing or demonstrations. In 1980, about half of labor disputes were in the form of sit-in strikes. The proportion has increased to 65 percent in 1987, 63 percent in 1988, and then decreased to 39 percent by 1989. It was reported that since 1989 the incidence of unlawful dispute acts that precede the start of negotiations have considerably decreased. Instead, lawful disputes that follow the report of the existence of disputes to the Labor Relations Commission,

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cooling off period, and acceptance of mediation and arbitration awards have increased (Korea Labor Institute, 1991:61). Since 1987 the most dispute prone industry has been manufacturing followed by transportation and machinery and metal industry. In 1990, more than 69 percent of labor disputes occurred in manufacturing and 15 percent in transportation, storage, and communication industries. Until 1987 most of the top ten chaebols including Samsung, Hyundai, and Daewoo were virtually union free. While Samsung has been successful to limit unionization to 4 of its 27 companies, the majority of the other chaebol companies have been quickly unionized since the 1987 Great Labor Struggle when the focus of union organizing moved from the female dominated small light manufacturing companies to the male dominated large firms in heavy industry. The labor disputes in 1987 and 1988 were not the exclusive union sector phenomenon. In 1987 actually more disputes occurred in the nonunion sector: 1,356 compared with 599 in the union sector, or 69 percent of all disputes. This rather abnormal phenomenon reflects the unhealthy status of South Korean industrial relations that has been deteriorating for decades: the official labor unions have not represented workers' interests properly and frustrated labor has had to rely on unlawful acts of disputes. Thus, intensive disputes in the nonunion sector have led to the subsequent unionization of many establishments and by 1988 the relative frequency of disputes in union and nonunion sector was reversed in all industries. By 1990, 95.7 percent of the total disputes of 332 occurred in unionized establishments (Korea Labor Institute, 1991: 61). It is much more desirable that labor disputes are handled by labor unions than by others. Thus, the year 1988 can be said as the beginning year of the normalization of South Korean industrial relations system.

The Labor-Management Councils at Firms As was discussed, the Labor-Management Council Law requires all firms employing 50 or more workers to establish a labor management council to discuss ways to improve productivity, to promote employee welfare, and to plan employee training programs. Furthermore, all employee grievances must be handled by this council regardless of the existence of a union. Basically management has only "meet and confer" requirement and there is no institutional guarantee for the neutrality of the council unless the worker members are also the union representatives. Thus, the council is generally viewed by unionists as a way to prevent unionization and thwart union activities.

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T h e Labor Relations C o m m i s s i o n , U n f a i r Labor Practice and Dispute Resolution As was reviewed in the labor law section, the Labor Relations Commission has the authority to decide on the matters of rights disputes caused by unfair labor practices and also provide conciliation, mediation, and arbitration on interest disputes when the labor and management cannot resolve disputes by themselves or where dispute acts are prohibited. When a union files a charge against the management on unfair labor practice, the commission may order a relief, dismiss the case, or reject consideration of the case. Over the years, the number of charges has steadily increased to reach 1,887 cases in 1989 then slightly decreased to 1,554 cases in 1990. There was a dramatic j u m p in the unfair labor practice charges between 1987 and 1988 from 528 to 1,515 cases, which reflects the increase in the number of unions and their intensified activities. However, the proportion of relief order to the total cases handled by the Commission has been steadily decreasing from 35 percent in 1983 to 11 percent in 1990, while the dismissal rates have been fluctuating around mid 20 percent level. The proportion of voluntary withdrawal has also increased to reach 55 percent in 1989 but decreased to 39 percent in 1990: 1,035 out of 1,887 cases filed were voluntarily withdrawn by the union (Labor Relations Committee, 1991). It is also worth to pay attention to the types of unfair labor practice charges. During the period of 1983-1988, the dominant form of management unfair practices alleged by the union was the management violation of the Item One of the Article 19 of the Trade Union Law: interference with, restraint of, or coercion of unions or employees in the exercise of labor rights. Its proportion to the total cases filed was over 80 percent until 1987 and then slightly dropped to 70 percent in 1988 but increased again to 76 percent in 1990. In that year, the Item 3 violation charges have increased to 22 percent. These figures show that unions have been struggling to secure their basic rights of existence and activities that are provided by the labor law. A further analysis of the data on the Labor Relations Commission's decisions on each of the item violations would shed some light on the commissions's position on labor disputes. The other major activity of the Commission is intervention in labor management disputes in the form of conciliation, mediation (actually fact-finding), and arbitration. The mandatory conciliation and mediation process during the law-required cooling-off period have been found rather ineffective because mediation begins too late and the mediators are not actively engaging in the mediation process (Kim, 1990:31).

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Current Status and the Prospects for the Future Labor-management Relations in Foreign Invested Firms The Foreign Capital Inducement Act (FCIA), enacted in 1963 and amended several times, states the government policy on foreign capital as "to effectively induce and protect foreign capital conducive to the sound development of the national economy and the improvement of the international balance of payments, and to properly manage such foreign capital". Since 1970s, as a way to expedite economic development, direct foreign investment from overseas has been encouraged by providing several types of privileges to those firms. Among those privileges are exemption from both corporate and income tax, excise tax, tariff, dividend payment for five years and half-exemption for the next three years. The total amount of foreign investment in South Korea accumulated to over five billion dollars as of 1989. As a way to further induce foreign investment, in 1970, the "Provisional Exceptional Law Concerning Labor Unions and the Settlement of Labor Disputes in Foreign Investment Firms" was enacted. This law virtually prohibits union organizing and labor disputes and provides union-free business environment to those foreign investment firms. This controversial law was finally repealed by the National Assembly in 1986 and currently no institutional distinction exists between domestic and foreign invested firms in terms of labor relations. The labor relations in foreign invested firms have been a sore issue for years but it became a more widely reported social issue since 1989 when the number of illegal plant closings sharply increased. Compared with 22 in 1987, and 20 in 1988, 32 foreign invested firms either permanently or temporarily closed down in 1989 resulting in over eight thousand laid-off workers. Further, 14 out of 32 cases were illegal run-away shops that closed down without notice to the government, employees, and unions, without paying wage and other lawrequired compensation (Ministry of Labor, 1989c; Hangyorae Shinmoon Daily, July 21, 1990). Most of the labor disputes in foreign invested firms since 1987 occurred in the firms that were 100 percent owned by foreign capital and centered in electric and electronic manufacturing companies (e.g., PICO Korea, Korea Tandy Corporation, U.S. Magnetics Korea, Korea Sumida Electric Co.) and in computer companies and foreign banks (e.g., IBM Korea, Motorola Korea, Barclays Bank Pic., Banque Paribas, Westpac Bank). While disputes in manufacturing firms were focused mainly on union recognition and wage increase, the major issues in service and banking firms were union recognition, differential treatments between domestic and foreign nationals, and unfair discharge (Junnohyup, 1991:104).

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In Which Direction is South Korean Industrial Relations Moving? Since the basic labor laws were enacted in 1953, the South Korean government has actively intervened in industrial relations. Especially since the 1970s, economic growth has been the national priority and the government has relied on strict regulations on labor movement so that business could achieve high economic performance by paying practically no attention to labor relations. This pseudo-industrial peace that was forced by the government on one hand contributed to continued stable economic growth, but on the other hand, it has internalized and deepened the inherent conflict between labor and management. The 1987 Great Labor Struggle was a dramatic revelation of the underlying, accumulated, severe labor issues in South Korea. For so many decades both labor and management did not have a chance to learn how to deal with each other through negotiations which involve compromise and concession. Whenever there was a labor dispute, the government immediately intervened to help management. As is well known, the automatic intervention of a third party in labor relations tends to result in a chilling and narcotic effect (Kochan and Katz, 1988:280-281), which reduces efforts by labor and management to resolve conflicts by themselves. Especially when third party intervention is not neutral but pro-management, labor will become more frustrated and suspicious and tend to rely more on illegal tactics, sometimes even on radical and violent ones, because it sees no other alternative. On the other hand, management will become addicted to the government help and will make no genuine effort to develop bargaining practices to resolve labor disputes and to bring industrial peace. South Korean industrial relations during the past four decades has presented just this case. The 1987 Great Labor Struggle pushed the underlying contradictions in the South Korean industrial relations system to the surface. The price was enormous in terms of lost production and export. However, it was also an excellent opportunity from which government, labor, and management could learn. The ensuing labor law revision, even though it went far short of expectations, was one of the government's attempts to better institutionalize labor-management relations. The negotiation experiences between labor and management are more valuable than anything else for the future development of Korean industrial relations. Again, traditionally the government has led the industrial relations system in South Korea but the current political scene in South Korea is quite murky. Kim Dae-Jung's new Democratic Party remains a minority opposition party since January, 1990, when two of the three opposition parties merged with President Rho's Democratic Justice Party and created the majority ruling Democratic Liberal Party in the National Assembly. The merger has resulted in more

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restrictive social and labor policies rather than progressive ones, which is reflected in the following shake-up of the Ministry of Labor and arrests of human rights and labor activists. Further, several financial and real-estate scandals resulted in a quite unstable political situation and widespread distrust of the established politicians and political parties even after the land slide victory of the ruling party in local government election in early 1991. What the politics in South Korea lack most seems to be the core of politics itself: negotiation and compromise. The result of 1992 presidential election will help shape South Korean politics and governmental labor policies for the rest of the 1990s. Government labor policy should no more be blinded by growth first ideology that neglects and oppresses labor rights. Further economic growth will be possible only with the genuine and voluntary effort and participation by labor, which in turn is attainable only through rational and neutral government labor policy including labor law reform to include the development of a respectable, professional, and independent third party for dispute resolution and legalization of Junnohyup and Chunkyojo. Industrial relations in South Korea is still very confrontational. The current status of the labor union movement in South Korea seems to be going through the process of internal struggle for the establishment of its own ideology. Since 1987, FKTU is more progressive than it used to be but it still needs to gain the rank and file support to be recognized as a genuine labor confederation. Chonnohyup and other industrial federations and Chunkyojo are still operating outside the current labor law. It will take some time for the moderate and radical factions of the labor union movement to merge and come up with a united front. Will the future Korean labor movement be more like the American business unionism to mainly pursue better economic life? Or will it be more ideologically and socially oriented and pursue more than just better wages and working conditions, e.g., codetermination and political participation like in Sweden or Germany? At this point, the Korean labor movement seems to be pursuing both economic and political rights. The outcome will depend not only on the nationalistic, democratic, and economic-justice oriented ideology of the union leaders but also on the domestic political shape after the 1992 presidential election, the reunification dialogue between South and North Korea, and the overall performance of the South Korean economy in new era of industrial competition.

Notes [1] Still, however, several hundred thousands of ethnically homogeneous Koreans are living in parts of Northeast China and Central Russia forming their own communities and maintaining Korean language and culture.

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[2] During 1987 South Korea experienced an unprecedented 3,749 labor disputes. Among them, 2,552 disputes happened in August and 703 disputes were recorded in September. These events immediately followed the June 29 Democratization Declaration by Rho Tae-Woo, who was challenged by the democracy movement which had spread to the middle class by spring, 1987. [3] The lack of union unfair labor practice provision should not be interpreted that the current labor laws are pro-union. Provisions that regulate and limit union activities are spread in various parts of the Trade Union Law, Labor Dispute Adjustment Law, Labor Relations Commission Law, and the Labor Management Council Law. [4] Recently, the Ministry of Labor brought a charge against the prominent Hyundai Construction Company in violation of this clause. The company allegedly set up a goal of reducing the union membership rate below 30 percent in December, 1989, and since then threatened and harassed employees to resign from the union. [5] Public enterprises are defined as the "business of public interest" including (1) public transportation; (2) water, electricity, gas supply, and petroleum refinery; (3) public hygiene and medical; (4) banking; and (5) broadcasting and communication (Article 4 of the Labor Dispute Adjustment Law). [6] On January 22, 1990, the Junnohyup (National Council of Trade Unions - NCTU) was formed as an independent union federation mainly composed by the so-called democratic labor unions that have been established since the Great Labor Struggle of 1987. Furthermore, in December, 1990, 16 largest unions formed a separate council "Yondaehoei". Both of these organizations are not recognized by the government. [7] Others view chaebols as the result of government co-optation of industry, not only because of traditional attitudes about the supremacy of the State, but also because the state controlled all access to internal and external credit (Steinberg: 1988:28). [8] Recently, it was reported that the government set a policy of restricting wage increases within single digits for 1991. While the FKTU came up with 16.6 percent and Junnohyup suggested 22.5 percent, the Korean Federation of Employers' Association maintained that business can't afford more than 7 percent wage increase.

References Anchordoguy, M. (1989) Computer Inc.: Japan's Challenge to IBM. Boston: Harvard University Press. Bognanno, M. F. (1988) "Korea's Industrial Relations at the Turning Point". KDI Working Paper No. 8816, 10-12. Seoul: Korea Development Institute. Bognanno, M. F. and S. Kim (1982) "Collective Bargaining in Korea". Industrial Relations Research Association Series, Proceedings of the Thirty-Fourth Annual Meeting, 193-201. Madison, WI: Industrial Relations Research Association. Chang, C.-S. (1989) "Human Resource Management in Korea". In Κ. H. Chung and H. C. Lee (eds.), Korean Managerial Dynamics, 195-205. New York: Praeger. Chang, M.-G. (1988) Nodongbup Haesol (Explanation of the Amended Labor Law). Seoul: Suk-Tahp Publisher. Chonnohyup (1991) Sa-Up-Bo-Go (Annual Report). Seoul: Chonnohyup.

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Chung, Κ. Η. and Η. Κ. Lie (1989) "Labor-Management Relations in Korea". In Κ. H. Chung and H. C. Lee (eds.), Korean Managerial Dynamics, 217-231. New York: Praeger. Dunlop, J. T. (1977) Industrial Relations Systems. New York: Holt. Federation of Korean Trade Unions ( 1979) History of Korea Labor Union Movement [in Korean]. Seoul: Federation of Korea Trade Unions. Freeman, R. B. and J. L. Medoff (1984) What Do Unions Do?. New York: Basic Books, Inc.. Kim, T. (1990) "Industrial Relations and Collective Bargaining in Korea: Recent Developments". Seoul: Korea Labor Institute. Kim, Y.-H. and N.-Y. Kim (1980) History of Korean Labor Movement (in Korean). Seoul: II Jo Ghak. Kochan, T. A. and H. C. Katz (1988) Collective Bargaining and Industrial Relations (Second Edition). Homewood, IL: Irwin. Korea Labor Institute (1991) Quarterly Labor Review, 1, 4, 42-65. Labor Relations Commission (1991) "Report on Decisions on Unfair Labor Practice Petitions". Internal Memo. Lansbury, R. and J. Zappala (1990) "Korean Industrial Relations in Transition: the Relevance of Australian Experience". Working Paper in Industrial Relations, Sidney: University of Sidney, Department of Industrial Relations, Working Paper No. 13. Lee, H. C. (1989) "Managerial Characteristics of Korean Firms". In Κ. H. Chung and H. C. Lee (eds.), Korean Managerial Dynamics, 147-162. New York: Praeger. Lee, S. M. (1989) "Management Styles of Korean Chaebols". In Κ. H. Chung and H. C. Lee (eds.), Korean Managerial Dynamics, 181-192. New York: Praeger. Ministry of Labor (1986, May 2) "Korean-American GSP Meeting Report". Internal Memo. Ministry of Labor (1988) The Labor System and Labor-Management Relations in Korea. Seoul: Ministry of Labor. Ministry of Labor (1989a) Nodong Tonggye Yoram (Labor Statistics Yearbook). Seoul: Ministry of Labor. Ministry of Labor (1989b) Korean Labor Laws. Seoul: Ministry of Labor. Ministry of Labor (1989c, November) "Current Status and Response Plans toward the Idling and Plant Closing of the Foreign Invested Firms". Internal Memo. Ministry of Labor (1990) Nodong Tonggye Yoram (Labor Statistics Yearbook). Seoul: Ministry of Labor. Ministry of Labor (1991) Nodong Tonggye Yoram (Labor Statistics Yearbook). Seoul: Ministry of Labor. National Education Association (1990) An Internal Memo on Korean Teachers' and Educational Workers' Union. Ogle, G. (1981) "South Korea". In A. A. Blum (ed.), International Handbook of Industrial Relations: Contemporary Developments and Research, 499-514. Westport, CT: Greenwood Press. Park, S.-I. (1988) "Labor Issues in Korea's Future". World Development. In D. M. Leipziger (ed.), Korea: Transition to Maturity (Special Edition), V. 16-1, 99-119. New York: Pergamon Press. Park, Y.-K. (1979) Labor and Industrial Relations in Korea: System and Practice. Seoul: Sogang University Press.

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Park, Υ.-Κ. (1988, June 16-17) "Economic Democratization and Industrial Relations in Korea with Special Reference to the Role of Unions". Paper presented at the International Symposium on Economic Democracy and Industrial Relations, organized by Soongsil University, Seoul, Korea. Reischauer, E. O. (1986) My Life Between Japan and America. New York: Harper & Row. Song, B.-N. (1990) The Rise of the Korean Economy. New York: Oxford University Press. Steinberg, D. I. (1988) "Sociopolitical Factors and Korea's Future Economic Policies". World Development. In D. M. Leipziger (ed.), Korea: Transition to Maturity (Special Edition), V. 16-1, 19-34. Tu, W.-M. (1984) Confucian Ethics Today: The Singapore Challenge. Singapore: Federal Publications. Yoo, S. and S. M. Lee (1987) "Management Style and Practice of Korean Chaebols". California Management Review, Summer, 95-110.

Lebanon Afif Zeinaty

Historical Overview Lebanon is an Arab country neighboring Syria and Israel. It has a land area of 10,452 square kilometers with a population estimated at 3 million inhabitants. The native language is Arabic and since the 17th century Lebanese scholars have contributed considerably to the renaissance of Arab culture and civilization. In addition to Arabic, the majority of the educated population speaks French, English, and other modern languages (German, Spanish, Italian, Russian). Language cultural centers are very active. Until 1918, Lebanon was part of the Turkish Ottoman Empire, but enjoyed autonomy and self government. However, on September 1, 1920, Lebanon became independent under the French mandate, with France helping to structure the public administration and the general infrastructure (roads, utilities, airport, telecommunications, schools, hospitals, etc.). In 1943, Lebanon parted with the French mandate and became independent. And since 1945, it has been a member of the Arab League (as member-founder) and of the United Nations. Ravaged by complex and intricate internal and external strife and wars since 1975, Lebanon currently enjoys some semblance of peace under the Taef (Saudi Arabia) agreement of 1989, sponsored by the Arab League with the help of the UN. This agreement settled the political power balance between the communities (Moslems and Christians), outstanding since 1943 and shifted some prerogatives to the Prime Minister. By oral agreement since 1943 (confirmed by the Taef settlement), the President of the Republic is Maronite (Roman Catholic), the Prime Minister is Moslem Sunnite, and the speaker of the House (the President of the Chamber of Deputies) is Moslem Shiite. Lebanon is a free and democratic monocameralist parliamentary republic. Its constitution was set up in 1926, mainly inspired from the French Constitution of 1875, the Egyptian Constitution of 1923, and the Belgian Constitution of 1831. It underwent some amendments in 1943 and 1989 (confirmed in the Taef agreement). Free and democratic elections are held every four years, to select a 99-deputy parliament. The government (Prime Minister with ministers) is responsible before the parliament or Chamber of Deputies. Economically, Lebanon has a long and outstanding tradition in trade and business dating back to its ancestors, the Phoenicians. The economy is based on free enterprise and free markets. The Banking Secrecy Law (1956) promoted the

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influx of capital seeking refuge in Lebanese banks and bolstered the capitalistic and free economic system. The private sector, due to the private sense of business of the citizens, once flourishing and prosperous, has been, of course, adversely affected by the wars since 1975. Socially, Lebanon has a free tripartite system, based on three groups employers, workers, and government. In 1948, Lebanon joined the ILO (International Labour Organization), headquartered in Geneva, Switzerland. This UN agency is tripartite: it is composed of three groups of delegates (of employers, workers, and governments) from about 160 countries. It is the only tripartite agency in the UN, the others merely consist of governmental delegates. The objective of the ILO is to foster a permanent social dialogue and to reach a compromise on the issues of industrial relations. This tripartite system enables an interaction between the social players and favors, due to the dialogue, social justice and labor peace. Employers are grouped into one Employers Association whose major members are: the Bankers Association, the Industrialists Association, the Hotels and Restaurants Association, the Trade Association, the Contractors Association, etc. The workers are grouped in the General Confederation of Labor in Lebanon (GCLL), which was formed in 1958. And on the side of the government, the Ministry of Labor intervenes as middleman (representing government and society) in issues of industrial relations.

Relevant Laws Labor Code (1946). The Labor Code of 1946 laid down the major aspects of industrial relations between employer and workers. It includes the main working conditions, such as working hours, holidays, vacations, medical care, salaries and wages, and end of service indemnity. It also covers issues such as disciplinary measures and the forming of workers' unions and employer associations. The code does not define the exact process for determining the contract between employer and employees. The code merely specifies that the labor contract may be individual or collective, without further details. Social Security Fund (1963). This law established four branches: • • • •

branch 1: End of service indemnity; branch 2: Family allowances; branch 3: Medical and maternity care; and branch 4: Labor accidents (workmen compensation) and professional diseases.

Branches 1, 2, and 3 were put into effect as of May 1, 1965.

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This fund covers only the workers (white and blue collars) that work in the secondary and tertiary sectors (industry, trade, and services), but excludes those that work in the farming sector. Law on Collective Bargaining, Mediation, and Arbitration (September, 1964). Labor litigations, conflicts, or disputes may be individual or collective. An individual dispute poses one worker against one employer, while a collective dispute takes place between a group of workers and one or more employers. Individual disputes are settled at the "Arbitration Court", consisting of one magistrate from the Ministry of Justice and two assistants, one delegate from the employers and one delegate from the workers. This kind of dispute is outside the scope of the law of September, 1964, and has been dealt with under the Labor Code of 1946 and in subsequent ordinances. The collective dispute procedure was codified in the Law of September, 1964. This law contains three parts: collective bargaining, mediation, and arbitration.

General Institutional Arrangement Part 1 deals with collective bargaining. It should be remembered that Lebanon ratified Convention 98 of the ILO (International Labour Organization), which established the general principles of collective bargaining. The law of 1964 laid down the following principles: 1.

2.

3.

4. 5.

a group of workers, unionized or not, may negotiate with their employer the conclusion of a collective contract embodying the working conditions agreed upon; the maximum duration of a collective contract can be two years, and may be renewed by negotiation. It is signed in three original copies: one for each of the signing parties and the third for the Ministry of Labor, to be published in the Official Gazette of the government. If, within a month from its receipt it is not published, then the contract still becomes enforceable at law. To be able to negotiate a collective contract, union delegates must secure written approval from 60 percent of the members. And upon conclusion of the contract, it should be ratified by a two-third majority vote of the membership. It is applicable to all workers in the firm, whether unionized or not. Upon renewal, the contract remains in force until the signature of a new agreement. A tripartite Supreme Council for Collective Contracts "must be" established. It would consist of delegates from employers, workers, and the Ministry of Labor. Its tasks would be to supervise the evolutionary trends in collective bargaining and to effect some work of coordination. In other

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words, it should monitor the social policies of the social partners. This council has not yet been established. A union may ask that the provisions of a particular collective contract, concluded by another union, become applicable to its own members under certain conditions and after approval by the Ministry of Labor.

(Historically, the Esso union, led by the author of this article, was the first to conclude a collective contract [with Esso management in 1961], three years before the law of 1964 was passed. It was pioneering work and the contract was inspired by the American practice of collective bargaining.) Parts 2 and 3 organized the two phases of mediation and arbitration for the settlement of collective labor disputes arising between a union or a federation and their employer or employers. Part 2 concerns mediation. This first phase of settlement of disputes embodies the following steps: 1.

when a collective dispute arises, the parties (workers' or employers' delegations) are entitled to seek the help of the mediator, usually an official of the Ministry of Labor (such as a labor inspector), for assistance in the eventual settlement of the dispute;

2.

it is clear that the Lebanese system is a two-step system: in this first phase (or first step) the mediator endeavors to negotiate with the contending parties and to drive them - by persuasion - towards an amicable settlement; each party may submit written pleas and documents as evidence of their claims and may secure the help of advisors and/or lawyers; the mediation phase may last for two weeks maximum. However, should the mediator deem it fit, he may add one more week of extension, totalling thus three weeks to facilitate the settlement.

3. 4.

5.

The proceedings are recorded in minutes of meetings at each sitting and, in the event the parties agree to the various points of discussion, then the minutes of meetings - duly signed - become binding on the parties.

6.

Should any point remain unsolved, due mention is made in the minutes, and any party is empowered to start the next step of the process, i.e., to go to arbitration.

7.

One remark here should capture our attention: the workers union, at the end of the mediation, may, if they so decide, go on strike (work stoppage) for 15 days for the unsettled points of contention.

8.

No strike (work stoppage) is allowed during the phases of mediation and arbitration. Of course, it is easy to notice that the law is flexible enough to allow a way out for each party to make a settlement at any milestone of the proceedings.

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Part 3, as mentioned above, handles the phase called arbitration, along the following lines: 1. 2.

3. 4.

arbitration can be free and voluntary or compulsory; should the two parties agree to free arbitration, they may select an arbitrator (or umpire) who can be a high-caliber judge, or a prominent business leader, or a reputed barrister-at-law, etc. The decision rendered by the arbitrator is binding on the parties. Any party can resort to compulsory arbitration by applying to the "Arbitration Committee for the settlement of collective disputes". The committee is composed of nine people: • 3 delegates of employers; • 3 delegates of workers; • 1 delegate of the Ministry of Labor; • 1 delegate of the involved ministry (economy, industry, trade, etc.) • 1 high-ranking magistrate from the ministry (who heads the committee) 9 Total

5. 6. 7.

The parties can submit any document, written or oral, to evidence their claims, but just the ones that were left unsettled by the mediation. The committee must render its final decision in a maximum period of 45 days from the date of receipt of the claim, filed by any one of the parties. The decision is final and binding on the parties who cannot make appeal against it.

Nature of the Labor Relations Process Until 1974, democracy and free enterprise made of Lebanon a haven of peace, prosperity, and fascinating social life, as well as, according to the Economist, "a jewel in the Middle East". The labor movement is united in one national confederation of labor. Strikes are short lived and low in number. And there has been an attempt by the authorities, since 1965, to establish a social security fund and to simulate a mini-welfare state. Of course, the 1975 events dashed such hopes, at least temporarily and until the reconstruction of Lebanon returns to the fore. There is much hope in mid-1991 that this time has finally arrived.

The Process of Collective Bargaining Collective bargaining may be conducted at three levels: national, sector or economic branch, and enterprise. There are no collectively-bargained contracts

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at the national level. National contracts are usually drawn up between the National Confederation of Labor and the Employers Association to regulate basic principles of general interest in terms of working conditions, such as hours of work, vacations, minimum wage, medical care, etc. The minimum wage rate and the cost of living adjustment for salaries and wages are yearly imposed by government decree, at the request of the workers movement, and after consultation with the employers. Inflation, from 1950 until 1971, was mild (2 to 3 percent yearly). Since 1971, the rates have been increasing: 5 percent, 13 percent, 15 percent, etc., up to 50 to 100 percent during the war years (since 1975). On the branch level, the two major collective contracts are those of the Banks Workers Federation and the Textile Industry Federation, first negotiated during the Sixties. A tripartite mission from the ILO, in May, 1967, helped in the final shape of the banks collective contract which became a model for later followers. However, the most common type of contract today is the collective contract at the individual enterprise and union level. In the petroleum branch, for example, the 12 operating companies have negotiated a corresponding dozen or so collective contracts. One clear advantage of this is the fact that the workers and their employers know each other well and appreciate their relative economic situations. There are at present about 350 collective contracts. The number of contracts is increasing at the rate of 10 contracts a year, which has been happening since the inception of the law in 1964. In this field of collective negotiation, recognition must be given to the "sense of compromise" and the "negotiating spirit" of the Lebanese who owe much to their ancestors, the Phoenicians. Until 1960, a union used to submit a list of 30 claims, and in final conclusion of the deal, one or two claims only were granted by the employer! But in 1964, workers' education programs were established with the aid of the ILO in Geneva. This was instrumental in upgrading the educational backgrounds of the labor leaders, and enabled them to streamline their claims by reducing them to a reasonable size and to reduce their political demagogy. The executive council of the union takes the initiative in collective bargaining by submitting a draft contract to the employer. They negotiate with the aid of their respective lawyers. The deal is concluded for a two-year period and embodied in a collective contract. Should any difficulty arise before the conclusion, the matter is referred to mediation in the Ministry of Labor who tries to iron out differences by an in-the-middle compromise. The employers in general favor the negotiation of contracts, because of labor peace in the firm and the elimination of strikes. It is worth noting that a collective contract cannot be imposed by compulsory arbitration. It is the result of voluntary agreement. And once the union members have ratified the collective contract, it becomes mandatory and enforceable at law.

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As much as it may at first appear so, collective bargaining is not a political process. One trait of wisdom in unions' behavior in Lebanon is that they leave their political differences outside the door of the negotiating room. It is a socio-economic process and the pragmatic mentality of the Lebanese takes care of the whole process. To illustrate, in 1967, after the one-week war between Israel and the Arab countries, there was a recession in the Lebanese economy. Tourism declined and, as a result, most hotels were empty. The hotel workers union, although a leftist one, reached an agreement with the hotel employers whereby workers would draw 50 percent of their monthly salaries until economic recovery, and the employers undertook not to fire a single worker. Even though the process of labor relations starts with a "confrontation", it ends up with "cooperation and compromise". In Lebanon, at least, the social climate of collective bargaining is based on the principle of "social class cooperation" and not on "class struggle", in the Marxist connotation of the term. It is easy to understand this attitude. Lebanon is a small country; society is fractionated into 17 communities, often linked - partly - by intermarriage. Everybody knows everybody. There is no barrier of stratified classes between the people.

Strike Activity No mention is made of strike in the Labor Code of 1946. However, the law of 1964 mentions the possibility of "work stoppage" (strike) within specified conditions in general after mediation and before arbitration. The idea of the legislation was to curb strike frequency and to reduce its impact to the minimum level possible. In practice, since 1946, and even before, workers have gone on strike, strikes being the only effective weapon in their hands to voice their claims strongly. Most of the strikes are sit-in strikes, are short in length (a week), and imply respect for the work premises. A peculiarity worth noting in the Lebanese social tradition is that strike days are usually paid by the employer, included in the global compromise (package deal) that follows the strike. This occurs whether - as a result - a collective contract is concluded or not. The main reason for this is that most of the unions are penniless, with poor finances and low membership fees. Employers, in a commonsensical approach, propose to eliminate any feeling of bitterness, in the event of non-payment. In general, union finances are unable to pay for the strike days of their workers. Employers, for their part, rarely use their right of lock out, i.e., to close down their facilities in order to discourage and counteract union claims.

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The purpose of the collective contract is to procure peace and stability on the work premises for both partners. Employers can operate in a peaceful atmosphere, focusing on their economic problems. And workers know beforehand the fringe benefits and working conditions that are granted to them during the contract period. In addition, a clause of "social peace" (pax socialis) is usually inserted in the majority of collective contracts, either in the form of an "absolute peace" or a "relative peace" clause. Absolute peace means that the union undertakes not to go on strike during the contract period, for any reason whatsoever. And relative peace implies that the union can go on strike, but only for the problems not covered in the contract. As a matter of fact, though, and putting aside the above legal subtleties, a strike never takes place during a contract period. In practice, whenever litigation arises on the interpretation of a contract clause, the mediation process is relied on to settle it.

Industrial Relations Actors The Role of Unions Since 1909, when Lebanon was autonomous under the Ottoman Empire (which collapsed in 1918), and later under the French mandate (1918-1943), the Law on Associations - passed in Istanbul - was applied to all the provinces in the empire. It was inspired by the French law and regulated the constitution of various associations: political, economic, social, humanitarian and charitable, etc. This law encouraged the railway line and the typographic workers to unite in "associations" aimed at developing social solidarity between the members. These were covert "unions". These associations were established in 1913, prior to World War I. The first strike in Lebanon took place in 1920, in some tobacco factories. These associations of workers were federated - informally - in a Labor Front which remained active until 1946, when the labor code legally authorized the constitution of unions. Since then, the role of the unions has focused on the following areas of interest: 1.

democratically elected, the objective of the unions is to defend the material and moral interests of their members, i.e., the workers, to upgrade their standards of living and quality of life, and to enhance their education and training;

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3.

4.

5.

6.

7.

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most of the workers' claims aim at the following: reduce working hours, increase salaries and wages together with fringe benefits (family allowances, medical care, maternity, workmen compensation, etc.), and improve the number of holidays and vacations; (Paid educational leave is a current clause in many collective contracts. Employers usually pay for education dispensed to their workers, whether in-house or outside programs. The purpose of this education or training may be general education, skill training, vocational training, business training and courses, etc.) a grievance procedure is usually inserted in contracts. On individual claims, the procedure enables the union delegate to help any plaintiff worker during the different phases of the complaint in the administrative channels of the firm. This grants the worker valuable legal and moral support in order to reach a fair settlement of his complaint. The union movement was instrumental in promoting workers' education. With the help of the Ministry of Labor, a Committee for Union Training and Workers' Education was founded in 1964. It is run by delegates from the general confederation of labor in Lebanon and by one delegate from the Ministry of Labor who has no voting rights (a 14-member committee). The purpose of the committee is to organize courses, seminars, and round tables for labor leaders (union executives) on various educational topics: political, economic, social, and legal themes. Most of the training consists of night courses, Sunday meetings, etc. In 1971, in cooperation with the Saint Joseph University in Beirut, a Center for Labor Studies was created on the university premises, to provide higher education for labor leaders: economic training and culture, economic research and social surveys, social press, etc. The offering of vocational training has also been of concern to the unions and programs to provide such have been developed jointly with the government and employers. The ILO in Geneva offered some help through its technical Turin Center in northern Italy. As a result, training courses are offered for various craftsmen: mechanics, electricians, electronicians, computer and watch repair workers, etc. A full-fledged hotel school was founded in Beirut in 1963, with the help of the ILO to train workers, at different levels, for the hotels and restaurants (cooks, butlers, servants, executives, managers). It operated for years and educated a breed of efficient hotel workers in Lebanon and overseas. The unions have been part and parcel of the Social Security Fund Council since 1965. The council is composed of government, employers, and worker delegates. The aim is to create social justice through income redistribution and the provision of social fringe benefits for all workers. The unions will also be members of the National Labor Council, a tripartite organ (government, employers, workers). The council's aim is to promote a

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national dialogue between the members on the major social issues: income policy, full employment, job security, technology and jobs, employment of women, education and social promotion, etc. 8. Coupled with the foregoing, the unions have been arguing for the institution of a National Economic and Social Council, with consultative prerogatives, to issue advice and recommendations on the main economic and social issues of the nation. It would be a kind of antechamber for the parliament. The deputies in general fiercely oppose this project which might curb their clout and prestige. There is a basic difference between this council and the one mentioned in section 7 above. This council would embody, in addition to the traditional employers and workers, the liberal professions, the small farmers and tradesmen, the small landlords, etc., i.e., all the producers of goods and services in the country, without any exclusion (agriculture and farming, industry, trade and services). This hope has failed thus far. 9. The amendment in the seventies of article 50 of the Labor Code which implemented a policy of protection for labor leaders, while carrying out their mission in the service of their unions. Arbitrary dismissal is reduced to the minimum possible, and treble compensation is payable to the labor leaders who suffer undue and arbitrary release from active service. In addition, policy for termination for economic reasons puts on employers the obligation to advise the Ministry of Labor, in advance, and to pay extra compensation, over and above the legal end-of-service indemnity owed to the released workers. 10. Usually white- and blue-collar employees are grouped within the borders of the same union. But legal unionism so far only applies to private sector workers. Government civil servants are not permitted by law to operate unions. However, there are endeavors to create committees in the public sector, to practice union life informally. 11. Labor leaders are not full-time employees of their unions. They usually attend to their union tasks after the end of their work at company premises. Nevertheless, very often union leaders are allowed to leave their work within office hours - to take care of union affairs, to meet government officials, etc. But individuals are not typically remunerated for this union activity. 12. Several unions (such as in the oil and bank industries) were able to secure advantageous working conditions for their members, in duly renewed collective contracts. Some such contracts have stipulated saving and thrift plans, extra indemnity beyond the legally mandated one-month-per-year-ofservice, beneficial medical schemes which cover up to 100 percent of the medical expenditure, yearly vacations up to 35 days based on seniority and length of service (compared to the 15 days a year laid down in the Labor Code of 1946).

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The public sector (government and ministries and related bodies) operate on the 35-hour week. In the private sector, most office workers do the same. In plants and industries, some work 40, 42, or 45 hours per week. Other firms have a 48-hour per week schedule, as per the Labor Code.

T h e Role of the G o v e r n m e n t The major role of the government is played by the Ministry of Labor, the think tank and manager of the government social (labor) policy. The ministry shares in the mediation and arbitration process. It is a source of information for all aspects of labor unrest. And it plays a general conciliatory role for any labor conflict, whether individual or collective. The different departments of the ministry also deal with all aspects of labor legislation. The union department supervises the creation and operation of unions and federations. Another department is the Labor Inspection Department which handles the relations between employers and workers, and sees to it that the legislation is properly implemented (Labor Code and subsequent decrees and ordinances). The ministry plays a leading role in the Social Security Fund where it provides 25 percent of the total yearly medical care expenditure. And in the field of income policy, the ministry decrees yearly the minimum wage rate and the cost of living adjustment, as a result of inflation, based on the consumer price index supplied by the Ministry of National Economy. In general, the ministry is an active partner in the tripartite process. It is a useful participant in all the joint committees for labor issues which group workers, employers, and government. In particular, though, the government through its various ministries - devotes particular attention to the topic of vocational training.

T h e Role of E m p l o y e r Associations The employer associations are actively engaged in the democratic tripartite process, as stipulated by the ILO. Together with the government and workers unions, they have participated in the life and meetings of the ILO in Geneva (Switzerland) since 1955. The employer associations are also members of all the joint bodies mentioned above, with the other two social partners. They defend their interests against the unions and intervene with the government for fiscal and other beneficial incentives. The LMA (Lebanese Management Association), a private non-profit group, jointly with employers, organizes yearly courses and seminars in the field of business: accounting, finance, marketing, personnel, management, etc. This

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training aims at upgrading the cultural level of the junior and senior executives of the firms.

The Number and Types of Unions Unionized workers are grouped in about 200 unions, federated in 18 national federations and all of the 18 federations are united in the General Confederation of Labor in Lebanon. The confederation was founded in April, 1958. The total union membership amounts to 50,000 workers (white and blue collars together). The rate of unionization fluctuates around 15 to 20 percent (i.e., total number of union members divided by the total workforce in the country). And the labor movement is monolithic and not pluralistic; it is mostly pragmatic in behavior. Principally, there are two types of unions: the trade union and the industry union. A sub-type of the latter would be the enterprise union. Trade unions group all the similar trades and craftsmen, operating all over the country and scattered over different plants and workshops. For example, all the mechanics, the electricians, the tailors, the carpenters, the fishermen, etc. belong to a trade union representing their particular craft. Industry unions group all professions in an industrial sector or large enterprise. For example, all workers in the textile or tobacco industries, the Middle East Airlines, or the banks belong to an industry union. A sub-type of the industry union is the enterprise union where every firm in the same industry has its workers grouped in its own specific union. For instance, the oil sector has about 15 unions corresponding to the 15 petroleum companies (pipelines, refining, and marketing) operating in the country. Most of the 18 federations are organized by industrial sectors (banking, oil, textile, transportation by land or sea, airlines, hospitals, education, public utilities such as water, electricity, railway line, Beirut port, tobacco, etc.). The rest are mixed with various branches, trades, and professions placed together.

The Leadership Structure of the Unions After a firm's workers receive a permit to unionize, they meet in a general assembly to elect the leadership of their union. This executive council must consist of a minimum of 4 persons and a maximum of 12 persons. The members of the council elect the officers of the union from among themselves: a president, a secretary, a treasurer, a financial controller. Other missions may be ascribed to other council members such as: secretary for foreign relations, secretary for public relations, etc. The other council members are advisors. The council has limited independent authority; for example, it has no right to decide a strike before securing the approval of the general assembly. In practice,

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the effective leader of the union is the president who plays the most active role in union life. Because of this, the choice of president is vital to the union's success. The executive council meets regularly to manage the affairs of the union, as is specified by the letter and spirit of the law. Often, though, there is a power struggle between the council and the general assembly (which is also common in many parts of the world).

Current Trends in Industrial Relations We can sum up the salient features as follows: 1.

2.

3.

4.

the Lebanese system has not been adversely affected by the destructive wars since 1975. On the contrary, it has survived the storm, safe and sound. More than ever, the Lebanese believe in and are attached to their democratic, capitalistic, and free enterprise system which is operating nicely, in spite of the horrors and the hardships of the wars (inflation, unemployment, migration, brain drain, etc.). In the promotion of labor-management relations, the action of the Friedrich Ebert Foundation in Lebanon should not be underrated. This foundation, closely associated with the German labor federation DGB, opened an office in Beirut in 1964 and started active worker education on the themes of cooperatives and union training (courses, seminars). It is still operating. As a result, many consumer cooperatives have been founded and the upgrading of labor leadership is manifest. Among the aspirations of the labor movement, mention must be made of the desire of workers to play a more active role in the politics and the development of the country, through a Labor Party, such as in Scandinavia or Great Britain. Attempts have been made in this sense since the sixties, and continue to this day, with the intention of becoming more influential in the destiny of the country. In 1983, a proposal was prepared, aiming at a basic reform of the structure of labor unions and employers associations, in order to increase their representation and improve their performance. This proposal is still a dead-letter in the drawers of the Ministry of Labor, but there continues much outside interest.

Among the ideas put forth in this draft, there is the proposal to abolish the requirement for unions to seek an ordinance of prior authority to operate, from the Ministry of Labor. The Lebanese law is in conflict with Convention 87 of the ILO which was never ratified by Lebanon.

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In general, the Lebanese labor-management relations system is moving toward more cooperation and flexibility. The labor movement in Lebanon is well aware of the controversy going on in Western Europe and other industrial countries on the likely future of labor unions. Much ink has been spilled on that subject over the past decade. In response to this controversy, the labor movement in Lebanon has adopted the following commonsensical attitude: 1.

2.

3.

4.

the controversy was prompted by the persistent decline in union membership, which has been continuing in most countries for 20 years. In France, the leftist federation CGT numbered 2 million workers in 1977 and in 1987 the membership decreased to 1 million. Many other examples can be cited. The reasons for this lack of interest in unionism are countless and are beyond the scope of this survey. We can argue at length on the pros and cons of union objectives and usefulness. In Lebanon, we believe that unions are an important tool to defend workers' identities and interests. As long as a better substitute for unions is not found, it is common sense to keep unions in operation. In a democratic process, as in Lebanon, unions offer a countervailing power to balance the strength and clout of employers and of government, currently very powerful. Unions are an imperfect human institution within the borderline of an imperfect society. Whatever we do, perfection is out of reach.

In our limited human condition, life is a series of successive efforts to reduce imperfections daily, but not to dissipate them altogether.

References Labor Code (1946). Beirut: Sader. Law on Collective Bargaining (1964). Beirut: Sader. Law on Associations - Code of Laws, Decrees, and Ordinances (1970). Beirut. Ministry of Labor (1963) Social Security Fund. Beirut: Ministry of Labor, Sader, and Official Gazette. International Labour Office (1985) International Labor Conventions and Recommendations 1919 - 1984. Geneva: ILO.

Mexico Richard A. Morales

Industrial relations in Mexico in the 1990s reflect profound economic, political, and social change that the republic has recently experienced. These changes originated in the unique alliance that was forged between the State and labor following the Mexican Revolution. 1 That alliance, established in the 1930s and 1940s and unique among Latin American countries, ensured the stability of the modern Mexican State by serving as a mediating structure which promoted the general welfare of the working class through intervention at the political level (Zapata, 1989:177). However, prolonged economic crises in the 1980s have placed a severe strain on this relationship as organized labor and Mexico's authoritarian regime respond to the multiple challenges of economic stagnation, political liberalization, and generational shifts among the leadership ranks. This is all occurring at a period when contending forces are renegotiating the social pact as Mexico seeks stronger links to the global economy. To understand where Mexico's path to the future may lead, one must first scan the nineteenth and twentieth centuries for a window to the past. A look at the last ninety years reveals both revolutionary and evolutionary forces at work. Structural and institutional relationships were redefined as a modern nationState was superimposed on nearly five hundred years of mixed indigenous and European civilizations. Critical to this understanding is the Mexican Revolution, 1910-1924, and the emergence of organized labor as a significant interest group in the post-revolutionary regime. In 1910, Mexico was celebrating a century of independence after three hundred years of Spanish colonial rule, occupation by France, and United States conquest and acquisition of the northern half of Mexico's sovereign territory; later to become the American States of California, Arizona, Colorado, New Mexico, and Texas. Prior to the revolution, Mexico had embarked upon the road to industrial development and organized labor activity was sporadic and limited to the newly industrialized sectors of mining and textiles. It was not until the 1930s when they grouped into regional and national confederations, that labor unions became a force to contend with. Mexican labor initially achieved an identity, at the onset of the Revolution, with the organization of the Casa del Obrero Mundial (the House of the World Worker) in 1912. In this turbulent period labor acquired representation in the ongoing revolutionary process by supporting the Constitutionalist forces in

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1915, in exchange for social and economic benefits for workers. The first example of a State-labor alliance began in 1918 with the creation of the Mexican Regional Workers Confederation (CROM). By affirming an explicit commitment by labor to the objectives of the Mexican State, CROM served as a prototype of the modern Mexican labor organization (Zapata, 1989:174). As the revolutionary regime became more institutionalized, labor's official political ties gained strength and CROM's membership grew from less than 10,000 workers in 1918 to over 500,000 by 1927. The 1930s marked a deepening of the Revolution with institutionalized social change occurring on the national level. Mexico began to industrialize in a period during which both labor and the State were ideologically on the left, and CROM was subsequently replaced by the federally-backed Confederación de Trabajadores de Mexico (CTM) (Zapata, 1989:174). The CTM was to become a powerful force in Mexico as one of the three official sectors of the dominant Institutional Revolutionary Party (PRI). The special relationship between organized labor and the Mexican political system culminated in the 1938 oil nationalization controversy, which began as a labor conflict between U.S. and British oil companies and various unions representing Mexican oil workers. This action not only consolidated the Mexican Revolution in the eyes of the world, but ratified the alliance between the Mexican State and the labor movement that permitted a certain ideological commitment by the unions to revolutionary nationalism (Zapata, 1989:175). This relationship continues to define the nature of industrial relations in Mexico, and serves as a barometer of the changes Mexico is experiencing in the 1990s.

Relevant Laws Mexican labor laws regulate individual labor relations, collective labor relations, labor litigation, and federal and State conciliation and arbitration boards. These boards are made up of representation of labor, management, and government, and are empowered to render final enforceable judgements (Millan, Perera and Lowe, 1990:40-41). The basic legal statement regarding what labor can and cannot do in Mexico is Article 123 of the 1917 Constitution (Zapata, 1989:177). Article 123 established the jurisdiction of the Mexican Congress and the State legislatures to issue labor laws that reflected the "needs of each region", and in accord with the precepts of the Constitution. In 1917 the Ministry of Industry, Commerce, and Labor was created and charged with enforcing the application of labor issues (Franco, 1987:3). Two major categories of unions are distinguished in Article 123: Section A refers to unions of "industrial workers, agricultural day laborers, domestic

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employers, artisans, and in general to all (covered by private) labor contracts". Such private sector unions are, in turn, subdivided depending on whether they fall into federal or local level jurisdiction. Section Β pertains to all public sector workers employed by the national government, the various Mexican States, and all municipalities. Each public sector union has a separate, specified category of bargaining procedures (Zapata, 1989:177). Article 123 defines labor unions as "associations formed for the study, betterment, and defense of the interests of workers and their employers", and recognizes five distinct types of unions" (1) gremiales, or those in the same profession; (2) de empresa, or those of a single company; (3) industriales, or those in two or more companies located in the same industry; (4) nacionales de industria, or those in one or more States; and (5) oficios varios, or those including less than twenty workers of the same profession, but located in the same municipality (Zapata, 1989:177). Throughout the 1920s the application of distinct local criteria to identical situations resulted in conflicts between Mexican States that affected railroads, mining, and textile industries. This series of measures resulted in the creation of the Federal Council of Arbitration and Conciliation. In 1926 the constitution was amended to allow the Mexican Congress to legislate on labor matters. For four years congress debated the creation of a single national labor code. The consensus that emerged came in the form of the Federal Labor Law of 1931 which allowed the application and enforcement of federal labor law to be carried out by both federal and local officials (Franco, 1987:6).

General Institutional Arrangement Interest representation in Mexico occurs through a corporatist system in which each citizen and societal segment must relate to the State through one structure "licensed" by the State to organize and represent that sector to society (Cornelius and Craig, 1988:27). The dominant political party since the revolution, the Partido Revolucionario Institucional (PRI), is made up of three official sectors, one of which is labor as represented by the CTM. The CTM is part of the Congreso del Trabajo (CT - Congress of Labor), an umbrella organization that groups together all major labor confederations, including those not affiliated with the PRI, national unions not part of the CTM, and the confederation of unions representing government workers (Federación de Sindicatos de Trabajadores al Servicio del Estado - FSTSE), regulated by Section Β of Article 123 of the Constitution. The CT acts as a kind of forum where labor organizations present common positions to the State (Zapata, 1989:178).

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Collective bargaining contracts that are signed reflect the political wishes of the State leadership as much as the economic realities of particular businesses. For example, the government may use general national development strategies as a basis for shaping negotiations for salary increases, rather than the profitability of particular companies. The consequence of the government setting a ceiling for salaries is that in these negotiations, salary increases are not the point of contention. Instead, discussions have centered on the extent of fringe benefits, or "prestaciones", where State control is not exerted as directly. The net effect is that the real negotiations are transferred from the plant level to the highest political levels within the federal government (Zapata, 1989:181). These negotiations have traditionally been facilitated by cooperative labor bosses, "charros", loyal to the PRI. State and regional labor federations are organized along federal jurisdictional lines without regard to functional specificity. Their membership is heterogeneous in terms of the size of affiliated unions, economic activities represented, and the kind of local unions included. State and regional federations are normally organized in local sections at the municipal level where a similar heterogeneity exists. Different national confederations may have their own State and regional federations operating within the same geographic area, competing for the same heterogeneous union membership. These unions predominate in more traditional economic activities characterized by smaller workforce concentrations and lower wage levels. Their internal resources, organizational strength, and mobilizational capacities are usually modest. Yet these unions represent the majority of organized workers in Mexico, and they have traditionally constituted the majority of CTM's membership. It is estimated that 26 percent of the entire Mexican workforce is unionized (Cornelius and Craig, 1988:41). Since the late 1940s this complex institutional arrangement has been defined by the nature of the relationship between the Mexican State and the industrial labor sector. This relationship reached a turning point during World War II when Mexico intensified its industrialization due to difficulties in importing manufactured goods from the United States. As the industrial labor force grew, the national industrial unions locked up control of the railroad, mining and metallurgy, oil, and electrical industries. Labor conflict also increased until 1945 when the CTM signed the Pacto Obrero Industrial, or the Workers Industrial Pact. Through this agreement the Mexican labor movement committed itself to support the official strategy of national industrial development (Zapata, 1989:175-176). This commitment to the State was delivered by the unions through the adoption of "charrismo" - autocratic rule by the "oficialista" (official) union leadership designed to control labor and discourage an independent union movement. Although the labor movement was still considered an important part of the government alliance, the State apparatus was clearly seeking to reinforce the interest of the capital-accumulating bourgeoisie over the interests of unions.

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This strategy of controlling the unions paid off in terms of the resulting high rates of economic growth. What it did not obtain in salaries, labor obtained through benefits provided directly from the State. The State-labor alliance persisted because it satisfied both the economic demands and the collective needs of the country's workers. Since the earliest days of the revolution, the Mexican labor movement and its bureaucratic leadership has aligned itself with the overall dynamic of the political system in a way which guarantees leverage for the State to operate efficiently (Zapata, 1989:177).

Nature of the Labor Relations Process There are two types of workers recognized under Mexican labor law: union and confidential. The law defines confidential employees as those who handle functions of administration, supervision, control, vigilance, or inspection. Although not all non-union workers are technically confidential, for practical reasons they are treated as such and their working relationship is governed by an individual labor contract, as opposed to a collective bargaining agreement. Nonetheless, Mexican labor laws set out the minimum rights of individual workers, whether union or non-union. The following is a summary of some of the most important provisions as of mid-1990 (Millan, Perera and Lowe, 1990:41): Non-Waiver of rights. The minimum rights of workers, as well as those later acquired, cannot be waived by the worker. Workweek and workday. The laws establish a basic 48-hour workweek with pay for 56 hours. A standard day shift consists of eight hours, a night shift of seven hours. Overtime. Overtime up to nine extra hours per week is paid at 100 percent of the worker's salary. Overtime in excess of nine hours per week is voluntary for the worker and is paid at 200 percent over the worker's salary. Holidays and weekends. The law establishes seven paid holidays per year, plus December 1st every six years (inauguration day for the new President). If the worker is required to work holidays, pay is required to be at 200 percent over the regular wage. Work on Sundays or on weekly rest days must be paid at 225 percent over the regular wage. Vacations. All employees have a right to six days of paid vacation after completing one year of service. This vacation period shall be increased by two days for each additional year of service until the total reaches twelve days. Vacations cannot be exchanged or compensated with pay and must be used within six months after each initial employment anniversary date.

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Dismissal and severance pay - The employer has a thirty-day period during which he can release the employee without obligation of any kind. Once the employee has been employed for more than thirty days, he or she may not be dismissed for lack of qualifications for the job. An employee may be dismissed for "good cause" as defined under the law. If the employee is dismissed for reasons other than good cause, the employer must pay the following: three months salary, twelve days per seniority bonus, or twenty days for each year worked if the employee terminates the work relationship for causes attributable to the employer, or if the employer refuses to reinstate the employee to the job after being required to do so by the labor board. Fringe benefits. These must be paid to the Mexican worker in accordance with federal labor laws as follows: vacation bonus amounts to 25 percent of the worker's salary for the vacation period; Christmas bonus, equivalent to fifteen days salary and must be paid before December 20th of each year; Housing Allowance whereby the employer must contribute five percent of the total payroll each month to finance the federal housing fund for workers (INFONAVIT); and profit sharing that amounts to ten percent of the annual taxable profits of the employer, and the employee's share must be distributed each year. This is mandatory. Social security. This system covers not only free medical care and retirement benefits, but also worker's compensation for occupational risks and maternity leave. Female employees are entitled to twelve weeks off at the time they expect delivery of their babies; six weeks before and six weeks after. The employer must keep her as an employee during that period, without pay but with Social Security fees. Her salary, in turn, is paid by the Social Security Institute during her maternity leave. While Mexican labor laws recognize company unions, industry unions, and trade unions, a minimum of twenty employees are required in order to legally form a union and demand recognition. Individual unions may join a confederation of unions such as CTM, and individual employees may not be forced to join a union unless the collective bargaining contract so states. Other key aspects of the collective bargaining process are as follows (Millan, Perera and Lowe, 1990:43): While sometimes limited to a specific term, collective bargaining agreements are normally signed for an indefinite period of time. As a rule, wages are renegotiated annually, and all other clauses including fringe benefits are reviewed and renegotiated every two years. Under the law, strikes may be started for any one of the following reasons: 1) 2)

a contract violation by the employer; the renewal or revision of an expiring contract, or the renegotiation every two years of an indefinite-term contract;

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3)

a substantial change in economic condition;

4)

to obtain from the employer the execution of a collective bargaining contract;

5)

to compel the employer to comply with the profit-sharing requirements;

6)

to compel the employer to renegotiate the contract salaries each year;

7)

to support another company's strike called for any of the above reasons.

In the event of a strike the employer's plant is effectively shut down, except for emergency personnel. No other individuals may enter or leave the premises. If the parties are unable to reach an amicable settlement of a labor dispute, either party may request a government mediator to help the parties resolve their differences (Millan, Perera and Lowe, 1990:43). Strike activity in Mexico has reflected the post-revolutionary accommodation between the State and organized labor, as well as economic effects on workers at any given time. The pattern of strike activity in the 1940s and 1950s largely reflected the evolving influence of powerful railroad and oil workers unions. Their challenges to the State led to the institutionalization of "charrismo" in 1952, and subsequent government repression against union leaders during the 1958-1959 railroad strike. Labor issues in the 1960s tended toward limiting worker demands within officiai structures like the CTM, rather than allowing them to spill over into the economy at large. By the 1970s, however, very real economic deterioration led to the emergence of "independent unions" not tied into the regime's official networks, and an increase in strike activity. The State, in turn, responded by moderating the economic downturn of the early 1980s with food subsidies, fringe benefits, and low-interest loans to workers within the official State-labor networks (Zapata, 1989:183-184). While the Mexican regime's ability to politically control labor unions was weakened by economic and political crises in the 1970s and 1980s, the traditional instruments of control remained in place. "Caciquismo" (local-level boss rule in a clientilistic political system) continued to influence unauthorized strikes and other forms of protest behavior, as the PRI government apparatus divided, bought off, co-opted, and occasionally repressed protest movements (Cornelius and Craig, 1988:29). For the resolution of labor conflict, the 1917 constitution established arbitration and conciliation juntas, equally represented by workers, employers, and representatives of the government. Today these juntas, under the Labor Ministry, have a recognized jurisdiction to mediate and rule on both individual and collective conflicts. Specifically, this labor law acknowledges the existence of both federal and local conciliation and arbitration juntas, as well as a combination of both federal and local juntas for the same purpose. The types of conflicts that can be brought before these juntas include: (1) conflicts between workers and employers, both individually and collectively; (2) between workers;

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(3) between unions; (4) between unions and workers; (5) between employers; and (6) between workers and the State (Franco, 1987:27).

Industrial Relations Actors While arbitration and conciliation juntas are prescribed by federal law to mediate labor conflict, it is important to note that how these bodies operate is a function of larger processes that reflect post-revolutionary Mexico. The behavior of industrial relations actors is circumscribed by the unique nature of Mexican structures and institutions, where group interests are articulated through patron-client networks that reinforce the "myth of the right connection". That is, the entire Mexican political system, of which labor is a significant and historic part, can be viewed as a series of interlocking chains of "patron-client" relationships. "Patrons" provide benefits to their "clients" in exchange for personal loyalty to individual leaders (Cornelius and Craig, 1988:21). How labor conflicts are negotiated are thus greatly influenced by overarching clientage structures responding to situational imperatives. Within the labor sector this system of clientilistic networks has traditionally favored "oficialista" unions recognized as arms of the regime, discouraged or undermined independent unions, and reinforced "charrismo" - the autocratic labor boss style of leadership. The intimate involvement of the Mexican government in the labor relations process characterizes and reflects the degree to which State and labor are intertwined. For each type of worker, be they blue collar, white collar, or peasant, there is a specific organization said to represent their interests in the larger political world. These labor organizations are then incorporated into larger entities for the purpose of accommodating group interests. Since the revolution, the effect of this arrangement has been that the ruling party (PRI) is actively involved with business and government officials to discuss labor demands. CTM officials attend government functions while government officials play an active role at labor congresses. The ongoing integration of actors from multiple interest groups, through the political system, generally precludes the possibility of a breakdown in communications between contending factions. Indeed, it is often suggested that the Mexican political system is not so much a place where order is imposed, as it is a source of political benefits for those groups incorporated into the larger system (Zapata, 1989:179). Since the 1940s this arrangement ensured the Mexican government's control over organized labor and strengthened ties between the CTM and the PRI regime that would endure for forty years.

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The 1980s In the early 1980s a world-wide collapse in oil prices sent the Mexican economy on a downward spiral that continues to have profound repercussions on the political system and State-labor relations in general. The impact of this shock was brought home to workers as government austerity policies undermined economic and social benefits, as well as the overall quality of their lives. Among the private sector "official unions" in 1983, the CTM, and the government began operating within the limits of a "solidarity pact", where each was committed to sacrifices in order to soften the effects of "La Crisis". Nevertheless, in economic sectors such as automobiles, steel, and metalworking, conflict erupted. While the quality of many fringe benefits deteriorated, wages in these unions fell far behind inflation (Zapata, 1989:187-188). Nevertheless, in the 1980s organized labor fared better than the unorganized labor force and the growing complexity of Mexico's economy made it that much more difficult for dissident leaders of independent groups to organize urban workers around common grievances. This reality, however, did not eliminate the perception by the Mexican people that the State-affiliated labor organizations, as exemplified by the powerful CTM, were instruments of manipulation, corruption, and repression, whose primary loyalty was to serve the regime (Cornelius and Craig, 1988:40-42). The emergence of independent unionism among ideologically diverse groups began in the 1970s and became localized and isolated during the 1980s. The independents continue to appeal to not only the discontented rank-and-file union members against the autocratic rule of CTM-affiliated labor bosses, but also to millions of unorganized low-income workers in Mexico's large urban centers (Cornelius and Craig, 1988:41). While independent unions have often challenged the traditional post-revolutionary arrangement between the Mexican State and the labor sector, their common denominator is their independent stance toward existing institutions. As these institutions are being redefined, some independents are at the forefront in the articulation of demands for union democracy. Nevertheless, the most effective of these demands seem to emerge from less hierarchically structured unions already familiar with democratic processes (Roxborough, 1984, in Cebotarer, 1989:712).

Current Trends Since 1988 the administration of President Carlos Salinas de Gortari has attacked Mexico's endemic economic crisis with an eye toward the country's

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potential role in the world economy. That has meant an active redefinition of Mexico's position toward foreign investment, the role played by the State in certain industries, and various other strategic approaches to Mexico's national development. The challenge for Salinas as he attempts to reform his own party, the PRI, is to maintain social peace as the structure that has provided stability since the revolution disintegrates (Economist, 1990a:3). Salinas' most difficult problem as he attempts the Mexican "perestroika" is dealing with hardliners in the entrenched labor sector (Economist, 1990a:4). The leading champion of the CTM's privileged position in the PRI is its ninety-yearold leader, Fidel Velasquez, the dominant figure in the Mexican labor movement for nearly fifty years. CTM's formal place in the PRI has traditionally meant the right to name a certain number of congressional and gubernatorial candidates in exchange for votes to the PRI. Traditional State-labor linkages are thus complicated by the larger debate over political reform in an environment where the government is advocating a free market, free trade economy, and a reversal of union power. This trend is illustrated by the speed at which free trade negotiations between Mexico and the United States have evolved in 1991. A free trade agreement would lift tariffs and ease trade barriers throughout North America. As such, it is an economic opening on which the Mexican President is pinning much of his broader agenda of political and economic policies aimed at modernizing his country. However, as Mexico seeks greater visibility and leverage on the international front, trade-offs on the domestic front have not been overlooked by the labor sector. Labor discontent is not surprising considering that workers have lost about fifty percent of their buying power since 1983 (Economist, 1990b:23). Significantly, because most official unions are perceived as government tools, most recent strikes have been prolonged because of intra-union power struggles surrounding the aging leadership within the CTM. At this crossroads President Salinas is expected to introduce new federal labor legislation following the 1991 midterm congressional elections. This legislation will likely reduce the benefits that workers are currently guaranteed under the law. Meanwhile, the government has formed a tripartite (government, labor, and business) commission to study various issues facing the Republic. While labor is expected to seek concessions on wages and a forty-hour workweek, the CTM also wants a "floating salary", to be adjusted on a company-by-company basis according to productivity and profits, annual bonuses, and private sector funding for worker training and development (Economist, 1990b:23). For the near-term it seems likely that more local union affiliates will take an increasingly independent position apart from the national union leadership, with strikes and violent work stoppages expected to become familiar aspects of Mexico's economic and political landscape in the 1990s. How Mexicans renegotiate the terms under which they will labor into the twenty-first century is an emerging

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story, influenced more than ever by external developments in a rapidly changing world.

Note [1] Popularly referred to as "La Revolucion," this cataclysmic rebellion and civil war erupted in 1910 and lasted through 1924. This watershed event in the history of Mexico was the direct outcome of economic and political strategies that failed in their efforts to impose industrialization in the late nineteenth century. Thus, the issue of industrial relations in Mexico is intertwined with the memory of the Revolution and has profound implications through today (Ruiz, 1980:ix).

References Cebotarer, E. A. (1989) Review of Unions and Politics in Mexico: The Case of the Automobile Industry by Roxborough, I. (1984). Contemporary Society, Vol. 18, 5, September, 711-712. Cornelius, W. A. and A. L. Craig (1988) Politics in Mexico: An Introduction and Overview. San Diego: Center for U.S.-Mexican Studies, University of California. Economist (1990a) "Global Forecasting Service for Mexico", 2nd quarter, 2-32. Economist (1990b) "Global Forecasting Service for Mexico", 3rd quarter, 22-54. Franco, J. F. (1987, May) "El Papel del Derecho de Trabajo y el Movimiento Obrero en Mexico". Unpublished paper. Millan, J., M. Perera and J. Lowe (1990, May) "The ABC's of Mexican Labor Relations". Twin Plant News, 2-8. Ruiz, R.E. (1980) The Great Rebellion: Mexico 1905-1924. New York: W. W. Norton Company. Zapata, F. (1989) "Labor and Politics: The Mexican Paradox." In E.C. Epstein (ed.), Labor Autonomy and the State in Latin America, 170-189. Boston: Unwin-Hyman.

New Zealand Peter Boxali and John Deeks

Historical Overview New Zealand is a small but fiercely independent nation located in the South Pacific some 1,500 kilometers to the east of Australia. While roughly the geographic size of Japan, it is populated by only 3.4 million people. The decisive date in modern New Zealand history is 1840 when the Treaty of Waitangi established British sovereignty over New Zealand while respecting the rights of the Maori chiefs to the possession of their lands, forests and fisheries. A New Zealand parliament was formed in 1852 (which since 1950 has consisted of a single chamber elected on a first-past-the-post basis) and New Zealand was accorded "dominion" status (effectively independence from Britain) in 1907. As elsewhere, New Zealand's present industrial relations processes and institutions must be understood in the light of particular historical events and forces. In New Zealand's case, this entails an appreciation of both the nation's colonial past and of the attempts of New Zealanders to shape a distinctive industrial relations system of their own.

The British Influence British and Australian settlers, arriving in New Zealand in the late eighteenth and nineteenth centuries brought with them the attitudes and customs of British capitalism. Despite the wish of the majority of the early missionaries that New Zealand should not suffer the "evils" of colonization and the desire of some at the Colonial Office that New Zealand should be settled by Europeans in a humanitarian fashion, the process of transplanting British business practices and law ensured that "class conflict" would take root in the new colony. As Roth (1978:20) puts it: Travelling half way round the globe in search of a land of opportunity, British settlers transplanted the economic arrangements they had known at home, a system with sharp divisions between the buyers and sellers of labour power. This system has been with us ever since and so has the conflict it inevitably generates.

The young New Zealand parliament made a habit of the almost verbatim transfer of British law. By the English Laws Act 1858, the laws of England (both statutes

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and common law), as at 14 January 1840, became applicable to New Zealand. Thus, the English law of contract (with its use of the class conscious terms, "master" and "servant") was implanted. In this way, British attitudes and social structures came to supply a fundamental basis for New Zealand Society. However, the New Zealand legislature chose to build their own superstructure upon the British foundation.

Towards a New Zealand Solution The 1870s and the 1880s were a period of poor working conditions for many (particularly women and children), and a time of largely unsuccessful direct action on the part of trade unions (culminating in the major defeat of the unions in the great maritime strike of 1890). Reeves, the Minister of Labour, was thoroughly disenchanted with strike and lockout activity which he described as "antiquated, barbarous, unscientific and wasteful" (1902:96). He studied labour relations worldwide and concluded that New Zealand could only create a better system through State regulation. He believed that an enlightened regulatory framework provided by the state would produce better outcomes than those obtainable through the naked power of the disputants. From 1891 on, he was urging his parliamentary colleagues to engage in a radical experiment with compulsory state provided arbitration. By 1894 he was successful. Thus Reeves introduced what Sinclair (1969:183) has called "the most progressive labour code in the world and the most comprehensive".

The Industrial Conciliation and Arbitration Act 1894 An appreciation of the Industrial Conciliation and Arbitration Act 1894 is the sin qua non of any attempt to understand industrial relations in New Zealand. The act created a process for registering both unions and employers associations. Significantly, it gave registered trade unions the right of "exclusive jurisdiction" - that is, they became the legally recognized voice of the workers covered by their particular "rules" in a way that debarred representation by other unions. The act (as amended in 1908) provided for industrial disputes to be referred first to a conciliation council chaired by a government mediator. The emphasis in the council was on controlled negotiation. Failing the resolution of all issues at this stage, either party could refer the dispute to the Arbitration Court (a tribunal presided over by a government-appointed judge) for a final and binding ruling (called an award). The price of this government-provided regime of union recognition and dispute resolution was the banning of strike and lockout activity.

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In a nutshell, Reeves attempted to create a system that would deliver statutory recognition and guaranteed dispute settlement to the trade unions and industrial relations stability to employers. For the government, the system was designed to facilitate national economic development without socially disruptive strike activity. In retrospect, the statute can be regarded as one of the earliest attempts in the world to enshrine a pluralist ideology (to use Fox's [1966] terms) in labour law, and encourage the resolution of industrial disputes through rational debate rather than demonstration of bargaining power. For a time at least, it appeared successful. Between 1894 and 1906 there were no significant strikes in New Zealand. Unions, by and large, opted to register under the provisions of the act although many had qualms about trading away their rights to pursue direct action. Parliament affirmed its commitment to the Reeves experiment.

Major Modifications of the System - The Demise of Arbitration As described elsewhere in this book, it is noteworthy that Australia also developed a system of compulsory state provided arbitration around the same time as New Zealand, making it possible to talk of an "Antipodean solution" to the problems of employer-employee relations. The fact that New Zealand has no written constitution and only one parliament (with no upper house) helps to explain why this common heritage of ideas is no longer reflected in a common approach to bargaining structure and process. The legal framework of industrial relations is more easily reformed in New Zealand than it is in Australia and the direct parties have been able to exert significant pressure for change at various points in New Zealand history. The classical arbitral system has come under major attack in both inflationary and deflationary economic periods (Boxali, 1990). In the end, it has not survived the weight of practitioner criticisms. From the late 1960s, when both unions and employers repudiated the stance adopted by the then Arbitration Court, the framework of collective labour law in New Zealand has been substantively reformed. An understanding of these changes is now vital to an appreciation of New Zealand industrial relations. Reforms of major consequence have included the Industrial Relations Act 1973 which formally recognized the growth of direct bargaining that had occurred in the inflationary postwar era. It did this by allowing registered unions to negotiate collective agreements alongside or on top of awards. Thus the statute formally endorsed a "dualistic" model of industrial relations (in a way that has not yet occurred in Australia). In so doing, it adopted the North American distinction between disputes of interest and those of rights. The current procedures for the resolution of these disputes are shown in Figures 1 and 2. Furthermore, in 1984 arbitration itself was made voluntary, a measure which effectively repudiated one of the two central pillars of the Reeves framework - the right of a registered union to settle an interest dispute by

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Peter Boxall and John Deeks Dispute of interest arises (due to imminent expiry of existing "contract")

Choice of direct bargaining

voluntary settlement enforceable through the Labour Court (called an agreement)

Choice of government provided assistance

V conciliated settlement (and, only if necessary and desired by both parties, an arbitrated settlement) enforceable through the Labour Court (called an aaaid)

Figure 1: Procedures for resolving a dispute of interest

compelling the employer party into an arbitration hearing. Because the parties had come to settle the vast majority (approximately 99 percent) of their disputes through conciliation talks or direct negotiations, state-provided arbitration had become decidedly nominal in the New Zealand system. In effect, the system had come to be dominated by a form of pattern bargaining associated with the trend-setting occupational awards (see below). Then, in the Labour Relations Act 1987 (see further below), the trend towards a more decentralized and less dependent system of bargaining was given further impetus. Naturally, these reforms brought about a different understanding of the role of direct action than that associated with a system of compulsory arbitration. Under the Labour Relations Act 1987, direct action was made legal in the last 60 days of the term of an award or agreement (thus allowing the parties room to exert strong

New Zealand

301 Either union or employer invokes the procedure

Γ

Other party cooperates

Other party fails to cooperate

Disputes Committee (equal members from both sides plus independent chairperson who is either mutually agreeable to the parties or appointed by a mediator) V 3 possibilities

Majority decision (excluding chairperson)

V

No right of appeal

Chairperson breaks deadlock by making a decision I ι I i Either party may appeal within 14 days

Chairperson refers dispute to Labour Court

Referred by any party to Labour Court

Labour Court . makes final decision Figure 2: Model procedure for resolving a dispute of rights

pressure when they deemed it appropriate in economic bargaining) but was ruled illegal in disputes of rights and grievances which must be resolved by appropriate committee procedures contained in every award or agreement.

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The Nature of the Labour Relations Process H o w is Collective Bargaining Carried O u t ? Historically, the most influential industrial documents in New Zealand have been occupational awards (for example, for engineers, drivers and clerical workers) negotiated centrally. Such awards have traversed a variety of industries and enterprises. Certain "trendsetting" awards (such as the Metal Trades Award) negotiated in conciliation talks early in the annual bargaining season have tended to dominate all wage settlements. The vast majority of other awards and agreements have tended to settle within a narrow band around the "pattern" figure. It has been common for approximately 70 percent to 90 percent of all documents to settle within 1 percent of the percentage wage increase obtained by the trend-setting awards (Harbridge, 1990:146-147). By the mid-1980s the major criticism of the New Zealand wage-fixing process was its centralized nature, its treatment of all industries and enterprises as if their economic circumstances were the same. Thus, although arbitration had become nominal the system of wage-fixing had retained a high level of centralization, reinforcing a focus on relativities between crafts. After receiving submissions from both unions and employers (Deeks and Boxali, 1989:250), the then Labour government sought to address these criticisms with the passage of the Labour Relations Act 1987. The implicit objective of this statute was to encourage greater decentralization of bargaining, to help facilitate a move away from bargaining based around occupations to structures based on industries and, where appropriate, enterprises. The act encouraged unions to join together to create a "single bargaining agent" on the employee side of negotiations through providing greater incentives to "composite bargaining". Along with its major economic reforms (which aimed to introduce much greater competition in product and finance markets), the Labour government hoped its industrial relations reforms would encourage the parties to develop a more productivity-driven approach to collective bargaining. This was seen as essential in an economy which had historically been significantly sheltered from foreign competition. An amendment added to the Labour Relations Act in 1990 made the commitment to industry and enterprise bargaining explicit in the objective cited in the statute itself and introduced a process designed to assist the development of enterprise bargaining in the situation where both the employer and the employees concerned wanted it but the unions involved were opposed. In summary, then, the law on collective bargaining in New Zealand has been going through a major period of transition. Having historically encouraged a centralized and occupationally-focused approach to bargaining, the law has been reformed to encourage decentralized bargaining primarily structured around

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"economic" units - industries or enterprises. This trend will no doubt continue under the new National government (elected on 27 October 1990) which also favours increasing decentralization of collective bargaining but with more radical reforms of trade unions (see below).

Adversarialism and Strike Activity It should be clear by now that the New Zealand system is essentially confrontational in the sense that its legislative framework openly recognizes conflict of interests. As noted earlier, it is a system based on a pluralist frame of reference. However we wish to make the point that the actual level of strike activity is not excessive. Productivity lost due to strikes in New Zealand is much less serious than that lost due to industrial accidents and absenteeism. Throughout the 1980s, an average of one seventh of the workforce have been involved in strikes in any one year, each striking worker losing on average just over four days work each (Deeks and Boxali, 1989:250). In terms of the total workforce, approximately one half of one day per annum is lost through strikes. On average, four times as much time is lost through reported industrial accidents (Campbell and Hay, 1984:31). And twenty-six times as much time is lost purely through absenteeism - around thirteen days are lost per worker per annum purely from unscheduled absence (Boxall et al., 1986). In addition, as we look more closely at the New Zealand strike data, we find that a single large stoppage in a major industry or enterprise can have a major impact on the statistics. Thus, for example, the famous 1951 waterfront dispute which lasted for 151 days, resulted in over a million working days being lost, more than twice the number of working days lost in any other year between 1925 and 1984. New Zealand's system of industrial relations, then, has not manifested itself in a high level of strike activity. Of greater concern is New Zealand's poor record in industrial accidents and worker absenteeism. And, above all, the most important statistic in the economic debate about New Zealand is the rate of labour productivity. The nation's poor rate of growth in productivity is reflected in the stagnation of real income over much of the post-war period (Table 1). It is concern with this issue that underpins New Zealand's current economic restructuring.

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Table 1: Relative growth of real wages (real wage index 1960 = 10)

New Zealand Australia Canada, U. K., U. S. A. Japan Denmark, Finland, Norway

1960

1987

10 10 10 10 10

10.1 17.0 17.0 27.4 19.0

Source: NZ Trade Development Board.

Industrial Relations Actors Trade Unions New Zealand unions owe much to their British parentage. Both the Engineers' Union and the Carpenters' Union were established in New Zealand in the 1860s by their English counterparts (Woods, 1963:31). They were joined in the same decade by locally formed unions including printers, tailors, plasterers and bakers (Roth, 1978). The current memberships of the largest ten private sector unions are shown in Table 2. Historically, union organization in New Zealand has been assisted by substantial periods of compulsory unionism imposed by statute (primarily from 1936 to 1961). At the time of writing, the law does not compulsorily impose union membership but allows employers and unions to negotiate the issue in the bargaining process. If they do not agree to compulsory membership, the workers concerned must be invited to have their say through a secret ballot. The new national government has pledged itself to further reforms of trade union rights. It intends to make union membership voluntary by statute and to allow employees to choose their own bargaining agent - whether a union or otherwise. Such reforms would eliminate the second pillar of the Reeves framework - that of union recognition through State registration. New Zealand unions are principally involved with negotiating awards and agreements, policing the implementation of these documents and representing workers who have personal grievances. Because of the historic centralization of the system, their expertise tends to be located in the hands of paid officials such as secretaries and organizers rather than in unpaid workplace representatives. This is a significant problem as New Zealand moves towards a more decentralized system. Like employers, unions will have to develop more sophisticated approaches to industrial relations at the level of the workplace (Deeks, 1990). The primary central organization of workers in New Zealand is the New Zealand Council of Trade Unions (NZCTU) formed in October 1987 from

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New Zealand Table 2: Largest ten private sector unions, 1989 Name of union

No. of members

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

39,232 37,096 28,128 26,400 20,181 19,238 16,326 15,063 12,892 12,824

Engineers' Union NZ Distribution Union Northern Distribution Union Northern Hotel, Hospitality and Related Trades Union Meat Workers' Union NZ Bank Officers' Union Northern Clerical Union NZ Labourers' Union NZ Workers' Union NZ Printing Union

Source: NZ Department of Labour.

former groupings representing private sector unionists (the Federation of Labour) and public sector ones (the Combined State Unions). The idea behind the merger was to create an organization large enough to challenge the increasing concentration of capital in large companies and broad enough to represent the predominantly white collar composition of the modern workforce. The NZCTU represents some 503,000 workers (31 percent of the total New Zealand labour force), 1 and is the largest "lobby group" in the country (Deeks and Boxali, 1989:60-62). It is recognized by government as that organization "most representative" of workers' interests and hence plays the role of worker advocate in tripartite talks (see below), major disputes and matters of public policy.

Employer Associations The Industrial Conciliation and Arbitration Act 1894 required employers to respond with a kind of bargaining organization similar to that used by workers. This led to the creation of a number of regional employers' associations and the birth of the New Zealand Employers' Federation (NZEF) in 1902. By 1987, there were four regional associations representing some 40,000 employers. While a number of large employers negotiate with their unions without outside assistance (for example, NZ Steel Ltd.), the majority of New Zealand employers are small (on average employing less than 20 workers) and depend heavily on the advocacy services and information relating to labour law provided by their local employers' association. The NZEF is the counterpart of the NZCTU in tripartite talks (see below) and other matters of national concern. In addition to

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the NZEF, a grouping of major employers, the New Zealand Business Roundtable (NZBR), has in recent years presented well-publicized views on matters of economic and social policy including industrial relations. It has regularly called for further reform of the New Zealand system towards more decentralized and voluntarist arrangements. As noted in this article, the trend in the framework of collective labour law in New Zealand has indeed been in these directions.

The Role of Government Government's principal role has been in setting a legislative framework in which conciliation and arbitration using government-appointed mediators and judges have played such a central part. The history of the development of labour law in New Zealand has essentially been one of modifying this framework in response to economic and social change. The current legislative framework is much more relaxed than that which prevailed ninety years ago. As indicated earlier, it incorporates a dualistic system of dispute resolution but still uses a specialist industrial relations court (formerly the Arbitration Court, now called the Labour Court) to ensure compliance with registered industrial bargains (both awards and agreements). The fact that both registered unions and employers can seek redress in this specialist court if the other party fails in it's obligations remains a crucial feature of the New Zealand system. Of particular importance for individual workers has been the development of a substantial body of precedents on the question of unjustified (i.e. unfair) dismissal. This body of law serves to protect union members from dismissals which are demonstrably unfair in respect of the reason given and/or the process followed (Deeks and Boxali, 1989:82-83). From the end of the First World War to the present time, however, governments have frequently adjusted the levels of wage change in the interests of particular incomes policy objectives. There has been a strong tradition until recently of granting general wage orders to compensate for significant increases in the cost of living. At times, particularly in the years following the "oil shocks" of the 1970s, wage ceilings and complete wage freezes have been tried. One of the first acts of the recent Labour administration (1984-1990) was to repeal a wage freeze and allow free wage bargaining to resume. This government tried to distance itself somewhat from direct intervention in wage fixing and major disputes, hoping to influence the level of settlement through its "tripartite wage conference" prior to the annual bargaining season (Deeks and Boxali, 1989:197-202). The tripartite wage conference was established as a meeting ground for government, unions and employers to discuss the general state of the economy prior to the start of wage negotiations. Besides law relating to the resolution of disputes, successive governments since the 1870s have enacted a wide range of legislation broadly relating to the

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quality of working life. Amongst the most important statutes are the Factories and Commercial Premises Act providing minimum standards of hygiene and occupational health and the Accident Compensation Act providing statutory compensation for, and rehabilitation from, workplace accidents and debarring private actions for damages. In addition, there are certain anti-discrimination statutes which make it illegal to discriminate in employment decisions on the grounds of sex, marital status, race or religious belief. Besides legislation, governments have sought to influence private sector personnel policies through personal example as a "good employer" in the state services.

Current Trends in Industrial Relations Clearly, as we have emphasized, the key trend in New Zealand industrial relations has been the attempt of government to reform collective bargaining in the light of broader economic restructuring. The emphasis of the outgoing Labour government was on facilitating the growth of industry and enterprise bargaining but otherwise leaving the parties to conduct their own affairs. The evidence indicates that the major liberalization of economic policy that has occurred, coupled with the removal of compulsory arbitration and other industrial relations reforms, has indeed brought some worthwhile change but has also met with some conservative responses (Boxali, 1990:531-532). The parties have achieved reform of a significant minority of the historical awards. For example, in 1987, the old general drivers award was split into a family of smaller industry-based documents. Similarly, the licensed hotel employees' award has been split into three new documents - one for major accommodation hotels, one for "pubs" and other liquor retailers and one which is essentially aligned to the interests of a single large company. These are both examples of decentralizing forces at work. Such documents should enable productivity concerns to play a stronger role in structuring the bargaining agenda. In addition to these changes, there has been a small but influential growth of company-level composite agreements. As noted above, these documents have the virtue of joining most if not all unions in all single document, creating what is often called a "single bargaining table". They hold the potential to deal with historic demarcation disputes and address the specific skill and productivity issues of the enterprise concerned. Companies to have achieved impressive new enterprise agreements include the major forestry organization, Elders Resources New Zealand Forest Products (now part of the Carter Holt Harvey group) and New Zealand's premier white wear manufacturer, Fisher and Paykel Ltd.. Some innovative arrangements in respect of performance-related pay have also been achieved in the New Zealand state sector where Labour introduced

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departmental rather than service-wide bargaining in 1988. A pathbreaking agreement in 1988 between Nissan (NZ) and the Engineers' Union (but now extended to include carpenters and electricians) has become a major reference point in the debate about the merits of these new agreements. The Nissan document incorporates only three basic classifications (manufacturing employees, technicians and team leaders), a company commitment to employee skill development and teamworking and an ongoing programme of joint consultation. It provides for individual performance appraisal of all staff within collectively bargained pay ranges. While opposed by some in the union movement as a dangerous step towards a unitary ideology, the Nissan document has led to levels of income growth for the workers concerned which are higher than industry norms and has enabled the company to achieve significant improvements in product quality and market share. These quality improvements have become part-and-parcel of the company's marketing strategy (Owen, 1990:58). While it is not true that there has been a general landslide towards decentralization, the trend is clearly in this direction. Both unions and management see the need for change. Unions must increasingly train workplace representatives to conduct bargaining and participate in such activities as joint working parties on matters of common concern. Management, too, must enable line managers at lower levels to identify desirable industrial relations objectives and pursue them in a way that improves the quality of employee relations. While New Zealand has not adopted a European-style approach to industrial democracy, such trends open up the possibility of increased worker participation in management. In the state sector, for example, unions have used the reforms to build consultative approaches to the redevelopment of personnel policies such as performance appraisal and merit pay. It seems most likely, however, that the extent and manifestations of industrial democracy will continue to vary from enterprise to enterprise in New Zealand. In addition to its bargaining reforms, the outgoing Labour government moved to make equal employment opportunity programmes mandatory in the private sector through the Employment Equity Act 1990. This statute also incorporates a procedure by which unions can seek examination and redress of perceived historic pay inequities between men and women. While there is a broad consensus on the need for legislation that improves the employment opportunities of women, Maori, ethnic minorities and people with disabilities, pay equity legislation that operates across enterprise boundaries remains controversial and faces likely repeal under the current government. Finally, it is important to comment on the escalating level of unemployment that has occurred under recent economic reforms. Unemployment rose from 4.6 percent of the workforce in November 1984 to 10.2 percent in November 1988. In the three years to November 1988, full-time employment in manufacturing fell by nearly 20 percent. The outgoing Labour government largely dismantled the "make-work" schemes of the previous National administration but attempted

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to target greater training assistance to particularly disadvantaged groups and provided greater income support for young people to stay on longer at school. It also provided partial wage subsidies to employers who employed job seekers who had been unemployed for at least 10 weeks. Such policies, however, "gambled" that the economy would ultimately emerge from its difficulties and generate a higher level of employment. In our view there is unlikely to be major employment gains for several years. Manufacturers, for example, believe that a further 15 percent of manufacturing employment will be lost by 1993 (NZ Herald, November 17, 1988). Our assessment is that governments will face increasing political pressure to invest in work creation programmes to cope with the "blow-out" in unemployment associated with the economic restructuring.

Summary and Conclusion The character of New Zealand industrial relations has been heavily influenced by the implantation of British law and social attitudes during the nineteenth century. At the turn of the century, however, the New Zealand parliament sought to establish a different basis for industrial relations - one which depended on state registration of unions and employer associations and the ideal of strike-free resolution of disputes through the state provided mechanisms of compulsory conciliation and arbitration. The history of New Zealand's industrial relations has been one of the parties' responses to this model and of its adaptations and reforms over time. Major reforms have included the relaxation of the official system to incorporate the growth of direct bargaining and the adoption of the North American distinction between disputes of interests and disputes of rights. In addition, unlike the Australian system, arbitration (in its classical form) is now voluntary in New Zealand. The thrust of collective labour law is now towards decentralized bargaining structured around industries and enterprises and away from occupational bargaining. The regulatory pattern of New Zealand industrial relations increasingly resembles that associated with the Wagner framework in the USA and Canada (Boxali, 1990:537). The New Zealand system is obviously adversarial in the sense that it enshrines pluralist presuppositions in the legal framework. However, it is our view that the phenomenon of strike activity has been overemphasized by the media and is significantly less important than the problems of industrial accidents and absenteeism. Of primary concern, however, is New Zealand's historically sluggish rate of productivity growth, a problem that has created the profound need for restructuring that now dominates New Zealand economic management and hence the bargaining environment. In this context, the historic parties face the major challenge of acquiring the skills associated with effective decentralized, productivity-driven relationships

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(Deeks, 1990:113). Some worthwhile progress has been made in this direction but much remains to be done. Trade unions face a new environment in which members on the "shop floor" must be equipped to play a fuller role in defining and pursuing their interests, where full-time officials must increasingly become facilitators, trainers, and supporters of decentralized initiatives. Unions must also prepare for the likely repeal of their historic rights in respect of membership and settled patterns of coverage. Management, too, faces challenges. An increasingly competitive product market makes it imperative that management improves its ability to engage in the kind of productivity bargaining that enhances competitive survival and improves the quality of employee relations. There is no doubt that the ability of both management and unions to adapt to the new environment will play a crucial role in New Zealand's economic performance over the coming years. For its part, government obviously has a vital role to play in two critical areas - that of the continuing evolution of a regulatory framework that supports improved industrial relations and workplace equity and that of formulating appropriate policies to deal with the unacceptable levels of unemployment that have accompanied economic restructuring.

Note [1] The "labour force" as defined by the New Zealand Department of Statistics includes both full and part-time wage earners and the self-employed.

References

Boxali, P., R. Rudman and R. Taylor (1986) Personnel Practice. Auckland: Longman Paul. Campbell, I. and D. Hay (1984) "The Cost of Accidents and Illness in the Workplace: A Comparison with Industrial Disputes". Labour and Employment Gazette, June, 31-32. Deeks, J. (1990) "New Tracks, Old Maps: Continuity and Change in New Zealand Labour Relations 1984 - 1990". New Zealand Journal of Industrial Relations, 15, 99-116. Deeks, J. and P. Boxali (1989) Labour Relations in New Zealand. Auckland: Longman Paul. Fox, A. (1966) Industrial Sociology and Industrial Relations, Research Paper No. 3. London: Royal Commission on Trade Unions and Employers' Associations, HMSO. Harbridge, R. (1990) "The Dispersion of Wage Settlements in Registered Collective Agreements 1984/5 - 1988/9". In G. Griffin (ed.), Current Research in Industrial Relations, 143-151. Sidney: Department of Industrial Relations, University of Sydney.

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Holt, J. (1986) Compulsory Arbitration in New Zealand - The First Forty Years. Auckland: Auckland University Press. Owen, B. (1990) "Organization and Industrial Change at Nissan New Zealand". In P. Boxall (ed.), Function in Search of a Future - Perspectives on Contemporary Human Resource Management in New Zealand, 51-59. Auckland: Longman Paul. Reeves, W. P. (1902) State Experiments in Australia and New Zealand. London: Grant Richards. Roth, H. J. (1978) "The Historical Framework". In J. Deeks et al., Industrial Relations in New Zealand, 20-58. Wellington: Methuen. Sinclair, K. (1969) A History of New Zealand Harmondsworth: Penguin. Woods, N. (1963) Industrial Conciliation and Arbitration in New Zealand. Wellington: Government Printer.

Nigeria Tayo Fashoyin

Overview With a population of about 112 million people, Nigeria is the most populous country in Africa. After attaining independence from Britain in 1960, the country's parliamentary rule was abruptly terminated by a military coup in January, 1966. Military intervention only compounded an already complicated political structure with strong ethnic or tribal and religious influence. Ultimately, the country was plunged into a devastating civil war during 1967-1970. After 13 years of military dictatorship, the administration of General Olusegun Obasanjo returned the country to an elected civilian government under a new American-styled presidential constitution in November, 1979. But the civilian interregnum was again terminated by the military in December, 1983, following a total collapse of financial discipline and profligacy of the civilian administration of President Shehu Shagari. However, the present military administration of General Ibrahim Babangida is currently implementing plans to return the country to civil rule once again in December, 1992. Nigeria is a country of 30 States with a strong Federal government. Surprisingly, despite the relatively long history of military rule and complex ethnic and social structure, Nigeria remains one of the few pluralistic democracies in Africa. Like most African countries, agriculture provides gainful employment for a majority of the Nigerian population. With the exception of a few large scale plantations, it is generally carried out by peasant farmers on small farm holdings with labour commonly supplied by family members. However, throughout the 1970s and 1980s, mining, largely petroleum oil, became the major industry and has remained the main source of growth for the economy, contributing about 98 percent of the country's foreign exchange earnings by 1986 (Akatu and Olisadebe, 1987). Nigeria is also blessed with a wide range of other mineral resources, including oil, natural gas, coal, tin and iron ores. However, in spite of the growth of industry, particularly manufacturing, industrial activity in the 1980s remained concentrated on the production of relatively simple import substitutes and assembly of imported goods, under a faulty import substitution industrialization policy. As a result of this policy, the industrial sector can be regarded as generally underdeveloped. However, a new industrial policy has recently been introduced as part of adjustment measures. The thrust of this policy is the encouragement of

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foreign investments, particularly in agriculture and manufacturing, the latter being required to use local raw material inputs. The favourable economic performance of the 1970s was totally reversed in the 1980s as a result of the instability and fall in petroleum prices which prevailed throughout the decade. Indeed, largely as a result of this development, the country's average annual growth rate of the Gross Domestic Product (GDP) was -3.2 percent during 1980-1986. Whereas in the preceding 15 years growth in the GDP averaged 8 percent per year. To reverse this trend, the government introduced in 1986 a Structural Adjustment Programme, SAP, the objectives of which were to (1) diversify the productive base of the economy so as to reduce dependence on oil and imports; (2) achieve fiscal balance of payments viability; (3) lay the foundation for a sustainable minimal inflationary growth; and (4) improve the efficiency of the public sector. Although an appraisal of this policy is outside the scope of this chapter, it needs to be mentioned that adjustment policies have led to the adoption of a market economic system which more than before creates a favourable climate for private investment. In the industrial relations arena, adjustment measures have had significant consequences, as will be shown in a later section. The Nigerian labour force is quite large, reflecting the size of the population. In 1980, the labour force was 32.7 million, or 34.4 percent of the population (Federal Ministry of National Planning, 1980:368). A phenomenal increase in industrial employment was associated with the change in the structure of production as mentioned earlier. These figures exclude employment in family businesses, small-scale establishments, and generally the informal sector which is usually not covered by government's statistical agencies. This category probably accounts for another 10 million workers in 1988, which then suggests that the employment potential of the unenumerated concerns is quite significant. Nevertheless, the point must be emphasized that in spite of the relatively large size of the wage earning group, it is still correct, even today, that wage employment accounts for a relatively small proportion of the labour force. Throughout the 1960s and 1970s, unemployment was largely an urban phenomenon and was prevalent among youths who had little education, skill, or job experience. Unemployment was generally uncommon among university graduates and skilled labour. Since the 1980s, however, there has been a high rate of unemployment among highly trained university and professional graduates who have not found jobs, as well as experienced, skilled men and women who have lost their jobs as a result of economic contraction and adjustment policies. With respect to the unemployed graduates and professionals, it is estimated that over 100,000 are in the labour market looking for employment. Admittedly, the severity of the unemployment among these groups has, in recent years, been

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attenuated by (1) large absorptive capacity of the informal sector where vast opportunities for self-employment exist, especially among the redundant workers and university graduates; and (2) vigorous government efforts at reducing unemployment through such agencies as the National Directorate of Employment which has introduced several employment programmes in agriculture, industry, and the vocations. The emphasis of adjustment policies on backward integration has served as an inducement by increasing the potential of high returns from these various programmes.

Labour Laws and Public Policy The State, as a sovereign entity, regulates a wide range of labour and management relation issues in the workplace. This function must be distinguished from the role of the State as an employer of labour, which makes it obligatory for public sector employers to apply relevant labour legislation when dealing with their own employees. The discussion in this section focuses on the role of the State in the regulation of labour relations. Labour laws, like all Nigerian laws, took their root from colonial legislation, the main outstanding feature of which was the principle of voluntarism. The emphasis of this principle was self-government of industry under which the parties were free to regulate their internal affairs within the broad framework of the law. In theory, government intervention was limited to setting the stage. In this respect, a wide range of employment areas, such as the general conditions of employment, wage determination, trade disputes, safety and health, workers compensation, and so forth were regulated (Adeogun, 1969:13; Emiola, 1982:7; Uvieghara, 1984:53-56). While this policy incorporated elements of voluntarism, cases dealing with trade disputes were, for the most part, resolved outside the legal framework, and generally through strong government intervention. In any event, the voluntary principle soon became unsuitable or irrelevant, given the peculiar structure of unions, the preponderance of government employment and, very crucially, government's semi-political approach to wage determination (Kilby, 1967:511). Yet, voluntarism remained the framework of public policy until 1968 when it was replaced, ostensibly as a result of the country's engagement in a civil war. Thus, beginning from 1968, the legal framework has emphasized the interventionist role of the State in industrial relations. The new policy, officially referred to as limited intervention and guided democracy, has been stated thus: This policy [...] is predicated on the continued guarantee of freedom of association, the promotion of strong, stable and responsible workers' and employers' organisations, the establishments and development of a suitable institutional framework for the effective

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prevention and expeditious settlement of labour disputes, the promotion of labour/management co-operation and of consultation at appropriate levels between workers, employers and government, and the vigorous enforcement of the provisions of labour legislation relating to minimum conditions of employment, social security, safety, health and welfare at work (Federal Ministry of Employment, 1975:2).

Although post-civil war legislation contains elements of the new policy, their application in real life cases have evidently been influenced by the beliefs and philosophy of the ruling elite. For example, the military governments of the 1980s tended to emphasize the more restrictive elements of new policy (Fashoyin, 1990:123-127). However, the adjustment policies that were introduced since the mid-1980s are likely to influence the application of the new policy, in favour of deregulation which has now become vogue.

Industrial Relations Actors Trade Unions Modern trade unions emerged in Nigeria in 1912 with the formation of what is today known as Nigerian Civil Service Union. The earliest unions were concentrated in the public sector, for the simple reason that government was practically the only source of wage labour. Industrial establishments developed in the mid-1940s. Yet, in spite of their growth, union membership is today concentrated in the public sector. In the private sector, only the relatively large industrial establishments have well-organized unions. Among the indigenous small-scale enterprises and Third World (mainly Asian) businesses, only a handful have viable union presence. The lack of strong unions in this segment of industry is due partly to shortcomings in the enforcement of labour legislation and partly the anti-union stance of many of the employers. Unions are generally absent in the large and expanding informal sector which, as we have shown, has a high employment potential. Here, the very nature of work, ownership, the worker-owner relationship, and the size of employment are factors which militate against unionization. In spite of the initial ambivalence and opposition of the colonial administration, the labour policy of that era emphasized the concentration of union effort on the narrow job interests of workers. This policy underscored colonial administration's anxiety about the collaboration between the unions and nationalist (independence) movements. Yet, it was often difficult to separate the two activities, because the achievement of political independence was seen, rightly or wrongly, as prima facie for securing the best working conditions for workers.

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In any event, the Trade Union Ordinance of 1938 marked the beginning of a positive and coherent colonial labour policy. Although the law came some 26 years after the formation of the first union, it provided regulations for union formation and administration. The much discussed feature of the law and one which critically influenced the structure and behaviour of Nigerian unions, was the provision that allowed as few a number as five workers to form a union. There are opposing views on the intent of the colonialists, as to whether the particular provision was a deliberate control strategy to disorganize African workers, or if it was made in recognition of the low level of wage employment, especially in the emerging private sector. Nevertheless, by 1950 there were no less than 144 unions with average membership of approximately 1,000. In fact, by 1976 when government began its restructure of the labour movement, there were more than 1,000 unions with an average membership of about 800 each and aggregate membership of less than one million workers. Actually, 58 percent of the unions had 250 or fewer members each! As a result of their small size, the unions were generally too weak to provide meaningful service to their members. The financial base of the unions was generally poor, and their leaders were often ignorant of basic industrial relations rules and processes; nor were they conversant with how to properly formulate and present their demands before the more enlightened (foreign) employers. Undoubtedly because of these shortcomings, trade disputes, many of which were factional, became rampant. Disputes of this nature were made worse by the entry in 1942 of the Trades Union Congress of Nigeria (TUCN), which was established as a central labour organization. Yet seven years later, the TUCN itself faced the problem of internal division, a development that has remained perhaps the most outstanding feature of the labour movement through today (Ananaba, 1969:232; Cohen, 1974:77). Between 1942 and 1973, no less than 28 central trade unions were formed. These organizations, at various times, broke into factions. Among the causes of the factional dissension were the external relations with different international trade unions, such as the International Confederation of Free Trade Unions (ICFTU) and World Federation of Trade Unions (WFTU), both of which gave a considerable amount of money to fund the many large and poorly organized unions and their federations. The official government position was against external linkages, as it was assumed to be detrimental to the country's security. Consequently, the government proscribed the activities of the main international trade unions in 1975, although the associations have remained practically unbroken. In 1989, the government made the Trade Unions (International Affiliation) Decree No. 35, legally enforcing the policy earlier introduced in 1975. However, recent developments in international politics, the globalization of the world economy, and the deregulation of the Nigerian economy have induced the government to withdraw this decree in 1991.

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As a result of these institutional disabilities, the majority of the unions were, up until the late 1970s, unable to improve the material conditions of their members in any significant manner. Given the inherent disunity among the unions, many employers took advantage of their workers by unilaterally prescribing employment conditions. It is noteworthy, therefore, that factional disputes at both levels of union organization have strengthened the resolve of the government to interfere in the unions' internal affairs. In fact, the Obasanjo administration had used this argument to justify its decision to carry out the reorganization of the 1976-1978 period. The aftermath of the restructure was the reduction of the nearly 1,000 unions into 42 large industrial unions and the creation of the Nigeria Labour Congress, NLC, as the only central labour organization, to replace the four that were in existence. (Along with the unions are about 35 senior staff associations for supervisory and junior/middle management employees). The 42 unions were compulsorily affiliated with the NLC. The rationalization dramatically changed the outlook of the unions; average membership was 29,581 in 1987, with nearly 60 percent having between 5,000 and 25,000 members each in the same year. The unions were given financial assistance by government so as to help them solve their financial problem and reduce dependence on foreign unions. Union dues are paid automatically, through check-off deductions decreed by government. However, workers who do not want to belong to a union can contract out although, for socio-cultural reasons, this is not a common practice. While these measures have generally improved the image of the unions and made them financially independent, critics regard them as control strategies by the government. Indeed, the takeover of the NLC by the Babangida administration in 1988 can be seen as evidence of government control, although it remains debatable whether the initial policy framework was designed to achieve this goal. Under the Labour Act of 1974, as amended, by the Trade Union (Amendment) Act 1978, Sect. 3, unions receive automatic recognition in a particular industry. This means that once a union has been so recognized, no other union can legally organize the workers in the particular industry. This does not mean that the workers involved are automatically organized. For a union presence in a particular company to be meaningful, its organizers must demonstrate that they have support of the majority of the workers. In the United States, for example, the National Labour Relations Board conducts representation elections to determine whether or not the majority of workers wish to be represented by a particular union. In Nigeria, on the other hand, such arrangement does not exist at present and, inevitably, union leaders and management people resort to any method imaginable to achieve their opposing objectives! In conclusion, there is hardly any doubt that government intervention in the internal structure of trade unions has helped them to solve some of their organizational problems. However, to the extent that the role of government in

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imposing a specific structure on labour is a contradiction of the current policy of economic deregulation and political liberalization, there appears to be a need to bring trade union policies in line with broader economic and political policies.

Employers' Associations By and large employers and their associations can be seen as reactive organizations, in the sense that their industrial relations policies are critically influenced by the behaviour of the unions. In Nigeria, employers' associations emerged much later than trade unions of workers, and were formed primarily to promote trade matters for their members (Imoisili, 1987; Yesufu, 1962:47). The structure of unions, as has been shown, provided no strong inducement for employers to come together for any concerted action on employment matters. However, when the Nigeria Employers' Consultative Association (NECA) was formed in 1957 as an umbrella organization of employers for industrial relations purposes, it took upon itself the task of educating its members on the need to develop favourable industrial relations policies among them. By this gesture, the NECA was able to encourage several employers to develop meaningful bargaining relationships with employees' unions. While this function of the NECA did not immediately lead to the formation of many combinations amongst the employers, it is a fact that individual employers became more tolerant of trade unions and were willing to accept the principle of collective bargaining at the individual company level. The growth of employers' associations followed the government re-organization of the unions, from which the industrial unions emerged. As a result, there was a dramatic desire among employers to come together for industrial relations purposes. Thus, during 1978-1982, 13 new employers' associations were formed and registered under the trade union law, bringing the total number of industrial employers' associations to 22. This unprecedented increase in the number of associations illustrates employers' resolve to provide a countervailing influence on industrial relations. Not only was this influence directed within their own organizations, but also in the formulation of the national labour policy, particularly in light of the deliberate public policy designed to enhance the image of unions. In industries where employers' associations exist, companies are encouraged to join. In fact the major employers are members of such organizations. For example, the employers' association in the foods industry represented about 80 percent of all employers in the industry in 1986. In the building and construction industry, on the other hand, only 57 percent of the 300 companies in the association in 1984 were in good financial standing. In this particular industry most of the indigenous construction firms, while comparatively small relative to the multinationals, are outside the association.

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Yet in spite of the rapid increase in the number of employers' associations, they represent less than 50 percent of employers in the organized private sector. There are three explanations for this relatively poor representation. First, some employers, whether large or small, still prefer to deal with labour relations issues on an individual basis. In recent years, however, the pressure of economic recession has intensified this individualistic tendency among employers. Second, some organizations, due to their small size, find it too difficult to operate within the sometimes rigid rules of such associations. And finally, the employers' associations themselves have not drawn their net wide enough to bring in more employers into their fold. Nevertheless, labour market pressures often induce non-member employers to implement terms reached between industrial employers' associations and industrial unions. On the other hand, some employers provide more favourable terms of employment than those existing in unionized firms, probably as a strategy to avoid unionization. Perhaps the major consequence of the growth of employers' associations is the increasing use of centrifugal bargaining relationships between each of the national unions on the one hand, and the respective associations, on the other. Before the economic downturn of the 1980s, approximately 30 multi-employer collective agreements were in existence in the country. Although centralized bargaining arrangements remain a key feature of the Nigerian industrial relations system, economic conditions have introduced an element of flexibility, thereby allowing individual employers to vary some of the centrally-determined conditions to suit their peculiar conditions. This need for flexibility in labour relations appears inevitable under economic deregulation.

The Nature of Labour Relations In the Nigerian industrial relations system there are two key overlapping subjects which are prominent in the labour-management relationship. These are collective bargaining and the settlement of trade disputes, and they are discussed in turn.

Collective Bargaining Since 1948 collective bargaining has been accepted by all the three industrial relations actors as the main machinery for regulating conditions of employment. First introduced in the public sector under the Whitley Councils system and subsequently in the private sector under the Joint Industrial Councils system, collective bargaining has, however, played a subsidiary role in the actual operation of labour relations in Nigeria.

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To forestall any misunderstanding, I need to point out here that in private sector organizations, particularly where trade unions exist and are strong, employers enthusiastically endorse collective bargaining and have effectively used the machinery to review employment conditions, generally through multi-employer bargaining arrangements (Imoisili, 1986:67). In fact, as has been shown previously, the thrust of NEC A's activities has been its emphasis on the use of the bargaining machinery, which is generally regarded as the most appropriate way to achieve industrial peace. Employers also see collective bargaining as a means of avoiding government-imposed conditions which are often politically motivated. In the public sector, however, collective bargaining is hardly used for substantive issues. Yet, as the major employer in the modern sector, government's employment policies and actions naturally reverberate to the private sector. Indeed, in very recent years the government, as employer, has increasingly taken to unilateral actions, while its actions and employment decisions have only undermined the bargaining initiatives of other employers. The main explanation for the intensified unilateral role of the government has been the introduction of economic adjustment policies which has inevitably induced the introduction of measures which are difficult to determine through negotiation. Indeed, its failure to use bilateral means to fix employment conditions in the public sector naturally causes a chilling effect on the enthusiasm among private sector employers in the use of bargaining machinery (Ubeku, 1983:150). Historically, the effective means by which employment terms are regulated in the public sector is the use of ad hoc wage commissions or tribunals which are periodically appointed by government. Awards of wage commissions are, however, fundamentally different from results of collective bargaining. For while the former represent unilateral decisions of the employer and are for the most part politically determined, the latter are more often based on rational economic realities. Undoubtedly, because of their political nature, awards of wage commissions often create problems for private sector employers who are normally not covered by the terms of such bodies but are nevertheless coerced by unions (sometimes with tacit government support) to enforce the awards. Additionally, through the demonstration effect, whereby commission awards instigate other price-setters to review their own prices upward, commission awards tend to offset the gains which they purport to give to workers, in view of the unprecedented increase in the cost of living that usually follow the awards (Fashoyin, 1986:95-101). Since the late 1970s, free collective bargaining has faced additional difficulties, such as government wage restraint policies which have adversely limited the scope of the machinery. In the public sector, labour relations face the additional problem of unilateral employer actions, particularly under military

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regimes that have assumed practically total responsibility for employment, allowing little scope for collective bargaining to operate.

Trade Disputes and Settlement In no other area of industrial relations has the voluntary principle of the pre-1968 era been made more impotent than with the settlement of trade disputes. Under this principle, the parties were, in theory, free to choose any of the available machinery - mediation, conciliation, or arbitration - to settle their disputes, and the element of compulsion, whether to submit to any of them or to accept an award, was out. What would happen if this policy was strictly adhered to need only be imagined. But, as indicated earlier, no government in Nigeria has ever felt any disability in dealing resolutely with trade disputes, whether or not they threatened public health, safety, or security of the country. The evidence suggests that in cases of this nature, the government usually invokes punitive legislation outside the industrial relations framework in order to deal with labour protests. However, as part of the interventionist policies that emerged in the late 1960s, trade disputes and their settlement have come squarely under strict governmental control. Indeed, the entire interventionist policy has been shaped by attempts of the government to deal firmly with trade disputes since the civil war period. Thus, the trade disputes decrees of 1968 and 1969 represented initial public policy to assert the superior role of the government in the area of trade disputes settlement. The 1968 law introduced compulsory and binding arbitration while the 1969 amendment completely abrogated the right to strike (Fashoyin, 1978:58). The war-time legislation was reinforced by the Trade Disputes Act and Trade Disputes (Essential Services) Act both of which were enacted in 1976. The former introduced an appellate National Industrial Court while the latter, which essentially modified the 1969 law, confined the outright ban on strikes to essential services. By these measures the element of voluntarism was substantially removed in the area of disputes settlement. The questions is: Can strikes be outlawed? During the prime of this policy, i.e., 1975, Nigeria recorded its highest number of strikes - 354 - and lost over 357,028 in man-days. The evidence then and now has therefore shown that it would prove more effective to promote bilateral dialogue in the workplace by such measures as encouraging the parties to find solutions to the causes of disputes rather than press the idle belief in the efficacy of no-strike laws.

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Contemporary Industrial Relations During the past two decades the behaviour of industrial relations actors has been shaped by developments in the socio-economic and political environment. The boom years of the 1970s represented a period of intense union activity and militancy during which trade union members made tremendous improvements in their living standards. To illustrate, the wage of the lowest paid salary earner in the public sector rose by over 108 percent between 1975 and 1980, with corresponding increases for employees in the private sector (Fashoyin, 1986:137). Overall, per capita income rose to its highest level of US $1,010 in 1980. Accompanying the increases in wages was the growth in benefits, both in size and variety. All these were achieved largely as a result of the combination of several factors. First, union militancy increased, which was made possible by a supportive public policy. Second, an economic boom and general prosperity had the impact of reducing employers' inclination to resist union wage demands. And finally, the readiness of the government, both as a model and largest single employer of labour, to grant generous salary awards to its own workers was a critical development. Within the breadth of five years, the government made four unprecedented wage awards through the wage commission system! The gains of the 1970s were practically cancelled in the 1980s, as the country experienced its worst economic crisis after independence. As a result of the fall in both petroleum exports and prices, due to worldwide oil glut coupled with economic mismanagement of the various regimes, the country's foreign exchange earnings needed to support the import-dependent industries declined significantly. Similarly, the lack of foreign exchange to support increased public expenditures led to massive reduction in wage employment in the public sector. The above provide the environment within which industrial relations actors operated in the 1980s. As a consequence of these developments, several unions lost their members by as much as 50 percent or more. For example, the union in the construction industry lost more than 78 percent of its 160,000 members between 1982 and 1987, while the textile union lost 60 percent of its 200,000 members between 1979 and 1984. Accompanying the decline in employment and union membership were reductions in wages and benefits, particularly in the public sector, because employers found it inevitable to adjust expenditures to reduced revenue. These developments have had profound consequences for the industrial relations system. Under the pressure of economic recession, unions and employers have begun to move away from their adversarial positions toward collaboration, as they seek alternative measures to the problem of redundancies, declining employment and compensation. During the 1980s, several union leaders were compelled to consult with employers in joint desire to find

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solutions to such problems as low capacity utilization, efficient human resource utilization, and the procurement of industrial raw material (Fashoyin, 1986:47). In other words, the union members have realized that their continued employment critically depended on the survival of industry. It is arguable that these developments are pragmatic and natural responses to current economic conditions. All the same, it seems that the long-term consequences of structural adjustment measures (e.g., free market system and privatization of a large number of public enterprises) suggests that industrial relations actors would find collaboration to be a realistic labour-management relations strategy as well as a highly effective approach toward assuring the international competitiveness of Nigerian industries. Indeed, as the prospect for deregulation of the economy seems irreversible, in consonance with the restructuring policies, the industrial relations actors would find joint effort a more attractive long-term strategic response to the challenge of the 1990s. In conclusion, the Nigerian industrial relations system of the 1990s is expected to respond to the consequences of the adjustment measures that began in the 1980s in a manner that will promote the individual and collective interests of labour and employers, and the competitiveness of the economy in the present decade and beyond.

References Adeogun, A. A. (1969) "The Legal Framework of Industrial Relations in Nigeria". Nigerian Law Journal, 3, 13-40. Akatu, P. A. and E. U. Olisadebe (1987) "Management of the Nigerian Economy". Economic and Financial Review, 25, 4, December, 54-66. Ananaba, W. (1969) The Trade Union Movement in Nigeria. Benin City: Ethiope Publishing Corporation. Cohen, Robin. (1974) Labour and Politics in Nigeria. London: Heinemann. Emiola, A. (1982) Nigerian Labour Law. Ibadan: Ibadan University Press. Fashoyin, T. (1991) Industrial Relations in Nigeria. 2nd Ed.. Lagos: Longman. Fashoyin, T. (1986) "Collective Bargaining Challenges During Economic Recession". In U. G. Damachi and T. Fashoyin (eds.), Contemporary Problems in Nigerian Industrial Relations, 47-54. Lagos: Development Press. Fashoyin, T. (1984) Incomes and Inflation in Nigeria. London: Longman. Fashoyin, T. (1978) "The Impact of the Trade Disputes Decrees of 1968 and 1969 on Strike Activity". Quarterly Journal of Administration, 13, 1, October, 53-71. Federal Ministry of Employment, Labour and Productivity (1975) The New National Labour Policy. Lagos: Federal Ministry of Employment, Labour and Productivity. Federal Ministry of National Planning (1980) Third National Development Plan, 19751980. Lagos. Imoisili, I. C. (1987) "Management Policies Towards Labour: The Unionization of Nigerian Employers". Nigerian Journal of Industrial Relations, 1, December, 27-42.

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Imoisili, I. C. (1986) "Collective Bargaining in the Private Sector". In U. G. Damachi and T. Fashoyin (eds.), Contemporary Problems in Nigerian Industrial Relations, 60-75. Lagos: Development Press. Kilby, P. (1967) "Industrial Relations and Wage Determination: Failure of the AngloSaxon Model". Journal of Developing Areas, 1, 4, 511. Ubeku, A. K. (1983) Industrial Relations in Developing Countries, The Nigerian Case. London: Macmillan. Uvieghara, E. E. (1984) "Nigeria". In R. Blanpain (ed.), International Encyclopedia for Labour Law and Industrial Relations. 1-181. Deventer and Boston: Kluwer. Yesufu, T. M. (1962) An Introduction to Industrial Relations in Nigeria. London: Oxford University Press.

Poland Maria Matey

Poland's Economic Situation Poland is proud of being the first European post-communist country to enter the market economy. But, because of its advanced position in this radical change, Poland is exposed to the utmost to new problems and difficulties connected with this unprecedented process. On the macroeconomic scale there are two major disasters devastating the Polish economy - both resulting in severe social problems: the high rate of inflation, which was 300 percent in 1990 (it decreased considerably in 1991) and the stagnation and recession in production threatening a break-down of the economy. At the same time, because of the unprecedented character of the situation of transition from communism to capitalism, there are no experiences and no patterns on which the solutions can be based and modelled. The transition from communism to capitalism is more difficult and complicated than was expected and forecast. For instance, the rates of unemployment resulting from such transition prove to exceed considerably those expected according to most competent economic forecasts. Unemployment in Poland amounted in Summer 1991 to 1.7 million, which is more than 16 percent of the working population. This rate will presumably rise to 20 percent by the end of the year 1991. The reasons for this phenomenon are the subject of intensive controversies among economists - both Polish and Western. Some of these reasons are connected with the structural recession and instability of the economy; some with the breakdown of Polish exports to the Soviet Union; others with restructuring the property system from State to private ownership. Anyway, the unemployment issue, along with the impoverishment of the population in consequence of the inflation, appear to be the crucial issues of Polish politics and the economy.

General Situation of the Labour Law in Poland The basis of the Polish labour legislation is the Labour Code effective from January 1975. This Code continues to be in force after multiple amendments. A very substantial and extensive amendment is now being prepared by the

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National Committee for the Reform of Labour Law; its aim is to adjust the code to the present situation of the transition period and also to adjust the code to the European Community standards, as Poland hopes to very soon join the community as an associate member. A total re-codification is planned for the mid-nineties. Besides the code, a number of separate important Laws are in force, among them: • • • • • • • • •

the Law of 28 December 1989 on group dismissals for economic reasons, with subsequent amendments; the Law of 29 December 1989 on employment; the Law of 23 May 1991 on trade unions; the Law of 23 May 1991 on collective labour disputes; the Law of 23 May 1991 on employers' organizations; the Law of 25 September 1981 on workers' self-management, with subsequent amendments; the Law of 26 January 1984 on workplace remuneration systems, with subsequent amendments; the Law of 6 March 1981 on State Labour Inspection; and a package of laws on social security and social assistance.

Labour Law Faces Unemployment How is Polish Labour Law reacting to the unemployment challenge? It has to be remembered that in the years that preceded the present transformations, the doctrine of labour law never had to do with the problem of unemployment in Poland. It took the right to work for granted and fiercely criticized the phenomenon of unemployment in the capitalist world. Already in the years 1989-1990 changes were introduced in the Polish labour legislation aimed at facilitating the initial processes of transition into a market economy, with measures concerning individual as well as group dismissals. For the last several years, starting with the works on economic reform undertaken still in the late period of communist rule in Poland, opinions were voiced in managerial circles that the labour code and its protection of employees against unjustified dismissals, made it impossible for managers to pursue a rational employment policy in their firms. It was so, in spite of the fact that in the 1980s the judicial interpretation of the notion of "unjustified dismissal" tended increasingly to exclude dismissals resulting from the company's economic needs. In the atmosphere of the "Round Table" the Labour Code Amendment of April 7, 1989, resulted in changes which made it easier to terminate employment with individual employees for economic reasons. In particular, the facilitation

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consisted in the possibility of reduction by the company of the statutory term of notice, exclusion of a portion of dismissals from the trade union's control, and restriction of reinstatement possibilities. However, a radical legislative step took place in the regulation contained in two laws of December 1989: on group dismissals and on employment, constituting a part of an extensive package of economic laws passed as the basis for the so-called Balcerowicz Programme. The notion of "group dismissal" has by now won a permanent position both in common parlance and in legal language in Poland. The definition of "group dismissal" follows indirectly from the way in which the coverage of the Law of 28 December 1989, has been specified. A group dismissal is one that takes place for either of the following reasons: 1) due to liquidation or bankruptcy of the firm; or 2) for economic reasons or for reasons due to changes in organization, production, or technology, if such changes result in the need to terminate employment of a group of employees on a single occasion or within a period up to three months, with such a group of employees constituting at least 10 percent of the staff in companies with a staff of up to 1,000 persons, or with a group of at least 100 employees in companies with a staff of over 1,000 persons. Due to the fact that group dismissals constitute a social hardship, they involve special requirements as to cooperation with trade unions and with employment agencies. The cooperation with the unions should result in an agreement concerning the group dismissal. To this aim, the Law provides for a definite procedure that is obligatory for the manager. He is namely obliged to notify the factory union (or unions if there are several of them operating in the factory) in writing about the intended dismissals at least 45 days prior to the scheduled date of that dismissal. The manager is also obliged to provide the unions with data about the reasons for group dismissals and to specify the number of employees and the professional categories designed to be dismissed. Upon notification, the union has the right to request to be informed about the firm's economic and financial situation and to submit within 14 days to the manager proposals aimed at reduction of the planned extent of dismissals. Following these preliminary negotiations, but not later than within 30 days from their initiation, the manager and the union(s) should conclude an agreement, particularly specifying the criteria of selecting employees to be dismissed, the order and dates of dismissals, and also the firm's other duties related to vital matters of the group to be dismissed. Besides the unions, the manager is also obliged to notify the competent employment agency, not later than 45 days before the planned date of dismissal. All these procedures, generally modelled on the European Community Guideline of 1975 on group dismissals, initially criticized as unsatisfactory by the unions (including both "Solidarity" and other unions operating in Poland) has now become routine, though some improvements are claimed for the future.

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Employees dismissed according to the procedure of group dismissals are entitled to an indemnity of 1 to 3 months wage, the latter in case of employment for at least 20 years. Of basic importance, of course, are unemployment benefits. They are due to persons out of work, provided they have been employed for at least 6 months before the unemployment, are registered as unemployed and are not offered adequate work or training, and are not sent to intervention works. The unemployment benefit amounts to: • • •

70 percent of wage during the first 3 months of unemployment; 50 percent of wage during further 6 months; and 40 percent on expiration of the period of 9 months of unemployment.

At the same time, the benefit cannot be lower than 95 percent of minimum wage in Poland or exceed the average wage in the country. A possibility of earlier retirement is created irrespective of age, if at the moment of dismissal a person has a definite period of employment. Besides the above mentioned facilities, a variety of actions have been undertaken to provide financial support for dismissed persons in order to establish a private small business though these initiatives frequently encounter bureaucratic obstacles. Special banks grant credits to persons who start individual economic activities on their own account but do not meet requirements of commercial banks. Also the trade unions (both "Solidarity" and other unions) take up various forms of assistance to the unemployed in finding jobs, requalifying, and starting individual economic activity. Despite the variety of such measures, unemployment remains an increasingly serious socio-economic problem in Poland, and it is sure that we are but at the beginning of a long and painful road in this matter.

A New Model of Industrial Democracy in Poland A quite new model of industrial democracy emerged in Poland from the most recent package of three laws of May 23, 1991: the Law on Trade Unions, the Law on Collective Labour Disputes, and the Law on Employers' Organizations. The fourth component of this package, the draft of the Law on Collective Bargaining, is still in discussion: two drafts of that law have been submitted to the parliament - one by the government and the other by the "Solidarity" union.

The Unions Currently, 3 basic trade union groups operate in Poland:

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the All National Union "Solidarity", which comprises about 2.5 million members (according to its own estimate), is at present headed by Mr. Marian Krzaklewski (the former chairman was Lech Walesa); the all National Union "OPZZ", which comprises about 5 million members (according to their own estimate) and is headed by Mr. Miodowicz. This union was shaped during the Martial Law period and its leadership has a socialist-communist descent. Unions not affiliated to the above-mentioned organizations.

Although no exact figures are available, it is estimated that union membership amounts nowadays to about 40 percent of the total employment. "Solidarity" is organized on the basis of territorial representation at regional and national levels. However, since it was strongly felt that there was a need for branch representation for branch level bargaining, branch sections were created early in 1990 and they play an increasingly important role. The factory "Solidarity" unions report to their respective regional committees. The OPZZ unions are organized on the basis of branch representation. The unions are subject to registration by the courts. The courts may refuse registration in case of nonconformity of a union's statutes with the law. An appeal from such refusal may be lodged with a higher level court whose decision is final. The Law of May 23, 1991, establishes a rule that in the workplace where more than one union operates, each of them represents and defends rights and interests of their members. Non-union members may seek help from the union of their choice, should this union agree to defend them. Should non-union employees not seek help or should the union of their choice not agree to defend them, the employer is free from any consultation obligations with the unions in such an employee's individual employment relations matters (for instance, dismissal). In matters of collective rights and interests unions may create their common representation in the workplace. In cases where the unions in the workplace do not achieve a common agreement within 30 days - in such matters as internal rules, hours of work schedule, or annual leaves schedule the employer may take decisions himself, taking into account the separate opinions of the unions involved. However this right of the employer doesn't concern collective agreements problems, which will be settled by a separate law on collective bargaining.

Employers' Organizations. The present stage of development of a market economy in Poland is marked by a plurality of forms of property - for example there are commercialized Stateowned enterprises, privatised companies with national capital, joint-venture

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companies with foreign capital, private small-businesses, and local self-government bodies. In November 1989 the Confederation of Polish Employers was created. It consists of newly formed industrial and economic organizations as well as a couple of already existing ones. The confederation has close connections with European and world employers' organizations. Its representatives take part in the Polish Tripartite Committee for Cooperation with the ILO. On May 23, 1991, the Law on Employers' Organizations was adopted. The law determines the position of such organizations in the political and economic system of today's Poland, particularly in collective bargaining. However, contrary to the long tradition that workers' unions have in Poland, especially intensive since 1980, employer's organizations find themselves at the starting point of their activities in a post-communist country.

Collective Labour Disputes It was only in 1980 that the term "collective labour dispute" entered into the official vocabulary of Poland. In 1982, under the Martial Law, the right to strike was made legal - however, it was subject to restrictions which were disregarded by strikers. As Polish workers were accustomed to ignoring legal strike procedures established by the communist law of 1982, generally regarded as "paper fortifications", there is a strong fear in Poland that they may continue to disregard the new, simplified strike regulations contained in the new Law of May 23, 1991 on collective labour disputes. Indeed, a new wave of social unrest seems to be approaching as a result of inflation, unemployment, and general impoverishment of the population. And this may lead to renewed workers' strikes. According to the law, collective labour disputes must be settled by direct negotiations between the parties which should result in signing an agreement or - in lack of consent - in the report of divergences. The next step in the settlement of the dispute is mediation. The part of mediator may be played by any person agreed between the parties. In order to help the parties in selecting a mediator the Ministry of Labour will establish a list of possible mediators in consultation with the trade unions. Should the mediation fail, the way is open for the union to go on strike. However, the parties may, on a facultative basis, have recourse to arbitration. Arbitration is performed by Arbitration Boards situated with territorial courts. An Arbitration Board competent for multi-company disputes is situated with the Supreme Court. The Boards are headed by judges of the relevent courts. The decisions of Arbitration Boards are binding, unless a party to the dispute makes previous reservation to the effect that it will not necessarily be bound by arbitration settlement.

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The new system of "peaceful" settlement of collective disputes, established by the Law of May 23, 1991, differs from the previous one by the fact that arbitration is no longer obligatory but voluntary. According to many opinions' voices in Poland, the difference is not important enough to make the system function, contrary to the past period when it was disregarded by workers and by the unions who in most cases engaged directly in strikes omitting the "peaceful" procedure. Of course, we need some months to formulate the opinion about how the new system works. According to the law, the strike is the ultimate measure which cannot be used without previously exhausting peaceful settlement procedures by direct negotiations and mediation. However a strike may be legally organized without peaceful measures, if illegal behaviour by the employer makes it impossible to engage in negotiations or mediation, as well as in the case of dismissal of a union officer involved in the dispute. A strike is proclaimed by the workplace trade union after a majority of the staff taking part in the ballot have accepted the decision, on condition that at least 50 percent of the staff have taken part in the ballot. A strike should be proclaimed at least 5 days prior to its commencement. The draft of the Law also contained the employers' right to lock-out; however this right disappeared from the draft during the parliamentary debates.

Collective Bargaining. The legislation currently in force includes the Collective Agreement Law of 24 November 1986 (now making part of the Labour Code, as its Chapter XI) and the Law of 26 January 1984 (with subsequent amendments) on the workplace remuneration systems. Collective agreements formed part of the traditional Poland's industrial relations system; however their importance was seriously diminished when, after World War II, they came under the communist system. Under the Labour Code, seventy seven national-level branch collective agreements were concluded. Most of them are still in force after numerous amendments. In the recent economic situation in Poland, what the workers urgently needed was an efficient national mechanism of wages adjustment to keep up with the rampant inflation, but this was done outside the system of collective agreements. As mentioned earlier, at present, two drafts of the new law on collective bargaining have been submitted to the parliament one by the government, another by the "Solidarity" union. But the passing of the law may take place no earlier than 1992. According to the legislation in force, three kinds of collective agreements may be concluded in Poland: •

national branch level collective agreements;

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workplace collective agreements; and workplace agreements limited to remuneration matters only.

It is expected that in the future, collective bargaining in Poland will place emphasis on agreements at the factory level.

Workers' Participation Poland has been striving for workers' self-management since 1956. As a result of the "Solidarity" movement's impetus, an advanced workers' participation system was introduced in 1981 but it could not be implemented because of the martial law that was in force. Most recently, the process of shaping a market economy has placed workers' participation at a critical turning point. In private enterprises, workers' self-management has been replaced by a system of employee share-holding. Twenty percent of an enterprise's shares are sold to its employees at half the share price (under the Law of July 13, 1990, on Privatisation of State Enterprises). Currently, it is the aim of industrial relations in Poland to develop a free market economy. The general trends are in favour of the privatisation process, drawing workers' participation aside. The package of three professional laws adopted in May, 1991, will surely bring about a radical change in the Polish system of industrial relations. Today it is too early to estimate the extent and efficiency of that change. Further developments in Poland deserve close attention.

Saudi Arabia Badiuddin Syed

History Saudi Arabia is one of the fastest developing countries in the world, trying its most to come out of the shadow of being an "underdeveloped country". Saudi Arabia has an ancient, glorious, and holy history. It is the birthplace of Prophet Mohammad (Peace Be Upon Him) and the cradle of Islam. Every year millions of Muslims visit its two most honorable cities, Mecca and Medina. It occupies the largest part of the Arabian peninsula and is the third largest oil producing country in the world. During the early decades of this century the region was divided into tribes. Late King Abdul Aziz Ibn Saud unified the country and founded the Kingdom of Saudi Arabia and gave it its present name by a royal proclamation in 1932.

Constitution The constitution of Saudi Arabia is mainly based upon "Sharia'h" - the Islamic Law. The sources of Islamic Laws are the holy Qur'an and prophet Mohammad's teachings (Hadith). From business dealings to civil and penal codes, from social customs to moral values, all have one common base which is the religion of Islam.

The Government Saudi Arabia is a monarchy at the head of which is the King. The king, who is also the custodian of the two Holy Mosques, acts as Prime Minister aided by the crown prince. The king appoints the members of the council of ministers. Legislation, organization, administration, and executive powers are vested in the council of ministers. Fiscal matters as well as all affairs related to the different ministries and other government institutes are referred to the council of ministers.

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The Judicial System The judicial system is composed of two types of laws "Sharia'h" or Islamic Law and Decree Law. The judicial authorities are the religious scholars and are called "Qadhi" (judge). They are independent and strictly follow Islamic laws. Decree laws are issued to regulate industrial and commerical affairs. The setup of courts are as follows: 1) 2) 3) 4) 5) 6)

High Council of Justice; Supreme Courts; Public Courts; Penal Courts; Commercial and Labor Commissions; and Board of Grievances (Nassar, 1979).

It is worthy to note that because of changing and expanding business environments, the government of Saudi Arabia has introduced several modern laws such as Companies Law, Labor Law, Insurance, Foreign Capital Investment, Banking, Taxation, etc.

Labor Relations Workforce The growth in socio-economic development of Saudi Arabia has created a large number of employment opportunities which could not be met by the number of new Saudi entrants into the labor market. This resulted in a large inflow of expatriate manpower into Saudi Arabia. Saudi Arabia heavily depends upon its foreign workforce. Basic labor and major technical experience is not available locally. Mainly the Arab countries, Pakistan, India, Bangladesh, Philippines and several other Asian, African, European, and North American countries provide the labor force and technical expertise. This diversified labor force has some unique characteristics: it is comprised of people from many different backgrounds, nationalities, religions, and languages (although Arabic and English are commonly used). The United States has a similar situation, but everyone in the U.S.A. has one feeling in common, that is, everyone is American or has a hope to be American. In Saudi Arabia this is not the case: very few expatriates have been qualified for the Saudi nationality. Hence, the concept of teamwork is rare. One nationality group competes against the other. Different groups of nationalities have their own interests and working ideologies.

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The industrial and agricultural sectors are getting tremendous support from both the public and private sectors and are creating more jobs. At the same time the Saudi government is trying to produce a local work force. Training centers have been established to train Saudis while educated citizens are given scholarships for higher studies abroad as well as at the local universities.

The Law Labor relations in Saudi Arabia are based on the "Labor and Workmen Law", created by Royal Decree in 1969. Its provisions are contained in 211 articles on some 61 pages (English text) and include all facets of the worker-employer relationship.

Collective Bargaining Labor relations in Saudi Arabia are quite different from those in western and other countries. In Saudi Arabia, the formation of political parties or labor unions is prohibited. The concept of collective bargaining in Saudi Arabia therefore, is also quite different from that in western or other countries of the world. Labor relations depend heavily upon the government. In Saudi Arabia, collective bargaining takes place between employer and the government. No employer can enforce the rules and regulations in his establishment unless they are approved by the Ministry of Labor and Social Affairs. The negotiations between government and employers sometimes take weeks to decide certain issues related to laborers in their establishments. The representatives from the government and the employer decide the matters for workers without any active participation of the workers concerned in the negotiations. The government represents and safeguards the rights of workers. The rights and duties of every worker are well defined in the related laws. Even the holidays, vacations, overtime, different types of leaves, working hours, etc., are clearly mentioned in the Saudi labor laws. In 1968, the government of Saudi Arabia regularized the labor laws and implemented them throughout the country. Every employer (private or public) and all employees are required to follow them. These labor laws include conditions of employment, service, wages, termination, compensation, dispute settlement, and all other related matters.

Employment Contract Every individual, Saudi or non Saudi, signs a contract with his/her employer for a specified or unspecified period. In most cases for non Saudis the contract is

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specified and can be renewed every year if both parties agree. If both parties continue to enforce a contract after its date of expiration, it shall be considered renewed for an unspecified period and Articles 72 and 73 stipulate the conditions for termination of contracts thereafter. The importing of a work force in Saudi Arabia is an industry. Besides government organizations, many other companies are involved in importing laborers and technical experts from different parts of the world. Normally, an individual signs a contract with his/her employer while still in his/her home country (before he/she comes to Saudi Arabia). In this contract the terms and conditions of his/her job, salary, and other benefits are mentioned. The contract period is obligatory and no expatriate can be employed by another employer during the contract period with the original employer.

Saudization The government of Saudi Arabia encourages all employers to hire local laborers. Indeed, laws have been made to protect employment opportunities for the local people and Article 48 of Saudi labor law states that Saudi workmen are equal in their right to work in all areas of the kingdom without discrimination (Ministry of Labor and Social Affairs, 1969). It is required of all employers that the number of Saudi workers in their organizations should not be less than 75 percent of the total number of workmen in that organization and their wages should not be less than 51 percent of the total wages of the organization's workmen. Because of the severe shortage of Saudi laborers, these types of rules are not completely enforced. Article 50 says that every employer shall prepare Saudi workmen to replace non Saudis. The employers are also required to maintain a register in which they keep the names of those Saudis who have replaced non Saudis. Every employer employing one hundred or more workmen shall train in technical jobs a number of his Saudi workmen that is not less than 5 percent of the total number of his workmen. These protection rules have shown encouraging results. Although there is not much improvement in the field of industrial and commerical labor, where the foreign labor force is primarily serving the country, at management, control, and operational levels Saudis have replaced many non Saudis. For example, Saudi Arabian airlines and some ministries have been Saudized and more than 80 percent of management and operational staff is Saudi. ARAMCO is the biggest achievement of Saudization. At the beginning of the development of its oil industry, all Saudi employees were at the totally unskilled level. Both intermediate and senior level positions were filled by expatriates (Madani, 1970). By 1987 more than 80 percent of such jobs were held by Saudis.

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Protections and Social Services Every employer is required to take the necessary precautions for the protection of workmen from hazards and diseases resulting from the work and the machinery used, and for the protection and the safety of the work. The labor law also binds all the employers to provide medical and other benefits depending upon the size of the organization. Social security pensions, benefits, and relief assistance are delivered through a network of 75 field offices distributed around the country. Social insurance is also available to all citizens. There are over 15 social insurance offices in the country and over 3 million workers have been enrolled in pension schemes. The social insurance covers compensation in cases of work injuries, occupational diseases, disability, old age, and death.

Employment of Foreigners No foreigner is allowed to work in Saudi Arabia unless he has a valid work permit in accordance with the form, procedures, and rules prescribed by the Ministry of Labor and Social Affairs. It is required by the law that an employer shall keep the workman's passport and shall not return it to him unless his contract is expired or passport needs to be renewed or any other reason which the employer is convinced is valid. All the necessary information from the passport should be mentioned in the contract. There are severe penalties and imprisonment for those who violate the laws.

Industrial Relations It is mentioned earlier that in Saudi Arabia, labor unions do not exist and hence, there is no role for labor unions. The most effective role is played by the government. Labor Commissions have the responsibility of keeping an eye on the labor-management problems.

Labor Commissions and Settlement of Disputes The Labor and Settlement of Disputes Commission include the following: a. The Primary Commission for settlement of disputes', b. The Supreme Commission for settlement of disputes.

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a. The Primary Commissions are located at main and all branches of Labor Offices. It is composed of three members experienced in legal matters. The chairman holds a degree in Sharia'h (Islamic Laws) and at least one of the other two members also possesses the degree in Sharia'h. b. The Supreme Commission consists of five members, three representing the Ministry of Labor and Social Affairs, one representing Ministry of Commerce and Industry, and one representing Ministry of Petroleum and Mineral Resources. One of the members is designated as chairman of the commission. The Supreme Commission has exclusive jurisdiction to render final and definitive decisions in all disputes referred to it on appeal. The Supreme Commission and the Primary Commission render their decisions by a majority vote of their members. Each of these commissions has the exclusive right to examine all disputes relating to labor contracts, and may summon any person for interrogation or assign one of its members to conduct such interrogation. The commissions have the right of access to any premises occupied by the organization for the purpose of conducting the required investigation in accordance with the provisions of the law. Suits are filed with the Primary Commission whose locality or within whose circumscription the place of work lies. If either party to the dispute wishes to appeal the decision rendered by the Primary Commission, that party submits the application of appeal to the Supreme Commission within thirty days of its being served with a copy of the decision to be appealed. In all cases, the parties to a dispute are allowed to appoint arbitrators for each party through mutual agreement. But the cases where a compromise solution cannot be achieved are not subject to arbitration.

The Procedure for Filing Suit A workman who is discharged for no valid reason may apply for a stay of execution of such discharge. The application shall be submitted to the director of the Labor Office of the area in which his place of work is located, within a period not exceeding fifteen days from the date on which the employer delivers the discharge decision to the workman, or notifies him of such discharge by registered letter or by any other means proving receipt. The Director of the appropriate labor office shall, immediately upon submission of the application to him, take necessary action to settle the disputes. If settlement is not reached, the director shall within one week from the date of submission of application, refer the same to appropriate commission of the area in which the place of work is located, together with a memorandum, containing a summary of dispute and the arguments of both parties together with the Labor Office's comments and recommendations for the settlement of dispute.

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The chairman of the commission shall, within three days from the date of referral of the application to the commission, fix a hearing for the examination of the stay of execution. The workman and the employer shall be summoned to attend such hearing. The commission shall expeditiously decide on the application for stay of execution within two weeks from the date of the first hearing. Its decision in this respect shall be final. The commission shall fix a date for a hearing to examine the basic issue within the week following the issuance of the decision. If the commission orders a stay of execution, the employer shall simultaneously be ordered to pay to the workman forthwith a sum equivalent to his pay from the date of his discharge. The employer may, within one week at the most from the date of issuance of the decision ordering the stay of execution, return the workman to his job and pay him his wage arrears, whereupon the dispute shall be considered settled and such settlement shall be recorded in a report signed by both parties and the chairman of the commission. If the said period expires and no settlement is reached, the commission shall decide on the basic issue within a period not exceeding fifteen days from the date of issuance of the decision ordering the stay of execution. If the commission finds that the workman's discharge was without a valid reason, it may order his reinstatement with payment of wages in arrears, or it may order payment of his statutory entitlements as well as any compensation due to him for damages he has sustained (Ministry of Labor and Social Affairs, 1969). The wage protections, penalties to workers and all related financial matters between employee and employer are regularized and the laws are written in the Saudi labor laws, codifying these commission decisions.

Employment of Women Islam discourages the unnecessary mixing of men and women. That is why in Saudi Arabia women are not allowed to work with men in Western style. Many women work at hospitals and schools. The education system in Saudi Arabia discourages co-education. The classes for boys and girls are separate. Education among women is increasing very fast; more and more professional women are joining business and academic fields. In business organizations, departments for women are separate. For example, nowadays banks are having women branches all over the kingdom where women are the employees and account holders are women. Saudi Arabian labor law gives protection to workwomen. They are entitled to take as maternity leave the four weeks immediately preceding the expected date of delivery and six weeks following that date. During a mother's absence on maternity leave, the workwoman shall be entitled to half pay if she has been in the employer's service for one year or more and to full pay if she has

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been in the employer's service for three years or more. The medical expenses for all treatments, examinations, and delivery is borne by the employer. Employers shall not terminate workwomen during their illnesses resulting from work or delivery, provided that such illnesses shall be confirmed by an approved medical certificate, and the period of absence shall not exceed six months. There are many other benefits which workwomen get in Saudi Arabia.

Strike Since there are no labor unions or labor leadership, and moreover, it is prohibited by law, it is not possible to organize labor unions and make collective demands. Every individual has his/her contract with the employer and for every individual a judicial system is there to protect his/her rights. Striking is out of the question in Saudi Arabia. Article 190 of Saudi Labor Law says: Any person who, using any means, causes or attempts to cause others to stop their work by agreement among themselves, or encourages, or attempts to encourage them to stop such work, shall be punished with imprisonment for a term of one year to three years or a fine of SR 5,000 to SR 10,000, or both.

According to Article 191: Where an employer, head of enterprise, employee or workman stops work with the object of exerting pressure on public authorities or of protesting against a decision or measure adopted by such authorities instead of having recourse to legitimate means, each such offender shall be punished with imprisonment for a term of two to six years or a fine of SR 4,000 to SR 10,000, or both (Ministry of Labor and Social Affairs, 1969).

Current Trends Employment Between 1979 and 1985, government employment had declined from 13.2 percent of total employment to 10.5 percent. Employment in manufacturing, which accounted for only 5.6 percent of the work force in 1979, grew at an average annual rate of 19.3 percent, and represented 9.3 percent of total employment in 1985. The construction industry's share in total employment declined from 21.1 percent to 19.0 percent. In the agricultural sector, employment has fallen while in other producing industries it has risen. The proportion of professional, technical, managerial, and administrative workers declined from 14.6 percent of the total labor force in 1979 to 12.7 percent in 1985. On the other

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Table 1: National composition of the civilian labor force (figures in thousands) Nationality

1979/1980

1984/1985

1989/1990

Saudi male Saudi female

1,366.4 126.8

1,649.2 136.8

1,984.1 176.6

Subtotal: Saudi Non Saudi

1,493.2 1,532.8

1,786.0 2,660.0

2.160.7 2.059.8

Total

3,026.0

4,446.0

4,220.5

Source: Fourth Development Plan 1405-1410H [1985/90], Kingdom of Saudi Arabia, Riyadh.

hand, the proportion of unskilled workers increased from 30.0 percent to 31.7 percent in 1985. While total employment in the kingdom grew by 1,420,000 during the first half of the 1980s, the Saudi component of this growth accounted for only 21 percent. The Saudi labor force grew at an average annual rate of 3.7 percent, compared to the non Saudi growth rate of 11.7 percent. The number of Saudi females in the labor force increased at an average rate of 1.5 percent. The share of Saudis in the total labor force declined from 49.4 percent in 1979 to 40.2 percent in 1985 (Fourth Development Plan 1405-1410H, 1985). The government of Saudi Arabia is giving emphasis to reduction of the foreign labor force by adopting advance automation and labor-saving technology. In addition, an increase in the Saudi working age population, the greater participation rate of women, creation of 630,000 new jobs, and departure of 600,000 expatriates will bring the share of Saudis in the labor force up to 51.2 percent. The share of non Saudis in the labor force is expected to decline from 59.8 percent to 48.8 percent in 1990 (Fourth Development Plan 1405-1410H, 1985). In the current plan, employment is planned to save the needs of structural change of the economy. It is expected that the economic growth objectives of the plan can be achieved with an overall reduction in labor force. A positive rate of increase in GDP will be attained by an increasing labor productivity. Table 1 shows the composition of civilian labor force.

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Labor Management Relations The labor management relations in Saudi Arabia are very cordial and healthy. The system provides all necessary tools to handle any problem arising between management and labor. There is no shouting and picketing, no processions, and no lockouts. All the disputes are settled according to the rules. Of course, the present system is not completely deprived of shortcomings - the perfect system still being the target of all nations. In Saudi Arabia a large number of workers come from third world countries and most of them are not always aware of the labor rules and regulations which can possibly lead to certain abuses by sponsors in the private sector. However, the labor department once informed of any irregularity has up to now unflinchingly seen that justice prevailed in all sectors of Saudi labor. The future of these relations seems to be the same as it is now but these relations will move to take new turns because of Saudization. When the labor force which is comprised of multinational people is replaced by local and only one nation of people, its attitude towards work will have to be different and its demands will, as a result, have to be otherwise.

References Britannica Book of the Year, 1988 (1988). Chicago: Encyclopedia Britannica Inc.. Fourth Development Plan (1405-141OH) (1985). Riyadh: Ministry of Planning. The Guide to Industrial Investment (1406H) (1986). 7th edition. Riyadh: Saudi Consulting House. Kay, E. (1979) Legal Aspects of Business in Saudi Arabia. London: Graham & Trotman Ltd.. Madani, M. O. (1970) "The Relationship Between Saudi Arabian Domestic Law and International Law: A Study of the Oil Agreements with Foreign Companies". Thesis. Washington, D.C.: The George Washington University. Marchington, M. (1982) Managing Industrial Relations. London, N e w York: McGrawHill Book Company. Ministry of Labor and Social Affairs (1969) Labor and Workman Law and Related Procedures. Jeddah: Ministry of Labor and Social Affairs. Nasar, K. S. (1981) Business Laws and Taxation in Saudi Arabia. 2nd edition. Riyadh: Kamal S. Nasar. The Royal Commission of Jubail and Yanbu (1979) The Annual Report. Riyadh: author. Saudi Industrial Development Fund (1985) Annual Report 1404/1405H. Riyadh: Ministry of Finance and National Economy. Wickersham, W. G. and B.P. Fishburne (1977) Current Legal Aspects of Doing Business in the Middle East. Chicago: American Bar Association.

Singapore Mohamed

Ariff

Contemporary labor relations in Singapore offer themselves as an interesting case for comparison with labor relations in both developing and developed countries. We describe these characteristics in four major sections in this chapter. Section 1 gives a historical overview. Section 2 provides an overview on the labor relations setting. The labor relations laws as these evolved over the last five decades are described along with the institutions that are responsible for the conduct of labor relations. To give context to this description, there is a brief introduction to the economic background over 1970 to 1989 within which the process of change in labor relations evolved. In this section we provide an analysis of contemporary nature of the labor relations process. Section 3 examines the roles of the key players in the scene while Section 4 is devoted to current trends in industrial relations.

Historical Overview The political history of Singapore, as an independent country with a constitution of its own dates back 25 years to August 9, 1965. Between September 1, 1963 and the date of independence, Singapore was a State within the Federation of Malaysia, from which Singapore ceded as an independent country through an agreement between the two sides. Singapore was a colony of Britain for some 145 years prior to August, 1963. Independent legislative authority was available to Singapore when the United Kingdom granted limited self-rule in 1954 with the establishment of Legislative Assembly to which some members were elected by those who were citizens of the United Kingdom. Singapore citizenship was subsequently introduced and more people were able to vote in subsequent elections.

Relevant Labor Laws The passing of the Trade Union Ordinance in 1939 and the Labor Ordinance in 1940 were the first two significant pieces of legislation by the colonial authorities to usher in the modern labor and trade union practices into Singapore

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(and other colonies in this part of the world). It is appropriate to call this the modernization-enabling legislation as it actually granted the basic freedoms of trade union organizations and decent legal basis for employment. Soon after, the Japanese captured Singapore in 1941 abrogating all the laws. The British returned in 1946. It was not until 1948 that the laws were reinstated after a period of military rule. There were two phases over which labor relations laws and regulations were introduced subsequent to the reestablishment of British rule. The first phase was during 1954-1958 and the second phase was during 1961-1968. Major changes in legislation were made during these two periods. During the first phase three important pieces of legislation were passed, namely (i) the Central Provident Fund Ordinance in 1955 providing for employer's compulsory contribution toward pension; (ii) Workmen Compensation Ordinance in 1955; and (iii) Shop Assistants Ordinance and Clerks Employment Ordinance. These ordinances broadened labor relations in the 1950s. During this period between 1948 and 1961, these laws enabled trade unions to be registered as legal organizations for the betterment of workers' working conditions. Next, the employment contracts were given legal status with certain basic terms and conditions established, such as working hours, safety at work, compensation for termination of work, overtime, and holidays and vacation leave. These laws, therefore, brought Singapore's labor relations into the mainstream with self-governing countries in so far as these helped to establish trade unions and certain minimum terms of employment. The next phase of legislation that furthered the labor movement in Singapore occurred rather rapidly in 1961-1968 and in radical directions so much so that this phase represented the birth of a new era for labor relations rather than a continuation of previously established patterns. The impetus for this came from a radical change in politics that took place in 1959, and continued to have far-reaching effects on other aspects of life in Singapore. The trade union movement - the Singapore Trade Union Congress and the Singapore Association of Trade Unions - comprising almost 300 trade unions, were loosely affiliated to various political parties. The political parties used their support in the workers' organizations to get elected. There had been a continuous period of industrial strife from 1946 through to 1963, largely on account of the trade union affiliation to national politics and at the same time to the national movements (in Singapore and Malaysia) to obtain independence from colonial rule. Labor movement was rightly concerned about the passing into law of what it considered as items of negotiation and the restrictions placed on free-bargaining through mandatory conciliation. The union movement suffered a decline in membership up to 1968, when it called a seminar and enlarged the movement's role from purely industrial relations to the more general role of enhancing the welfare of workers through extra-industrial relations activities.

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The first of the major pieces of legislation was the passing of the Industrial Relations Act (incorporating previous legislation) which introduced (i) the principle of conciliation by the Ministry of Labor when free collective bargaining breaks down, (ii) compulsory arbitration award by an industrial arbitration court under certain circumstances, and (iii) the idea of managerial prerogatives (of hiring, firing, retrenchment, assignment of work, and others) which cannot be included as items for negotiation by a trade union. The major reason for such laws was stated at that time as attaining "industrial peace with justice": this refers to the idea that there must not be too frequent resort to industrial action and that parties reluctant to agree on a collective agreement can be made to do so on a fair and just basis by the intervention of a neutral third party (the Ministry of Labor) or by the decision of an arbitration court hearing views from dissenting parties and then awarding a settlement which would be legally binding on the parties. This legislation had a far-reaching effect in that the Singapore industrial scene became quiet with fewer and fewer industrial disputes. The norm of settlement through the process of collective bargaining and arbitration, if the former failed, has evolved as an acceptable method of dispute settlement some 20 years after the passing of the act. The other laws were enacted in 1965 to 1968. These were Regulation of Employment Act, 1965, The Employment Act, 1968, the Factories Act, 1969, The Workmen Compensation Act, 1969, and amendments to the Central Provident Fund Act. These laws together established minimum and decent working condition norms by establishing minimum standards on a long list of items which every employer should observe. Hence labor relations practices were drastically modernized and brought in line with practices considered essential for good labor-management relations. Among the items were such issues as working hours, overtime, medical leave eligibility, maternity benefits for female workers, earned annual leave, terms of discontinuation of contract, etc.. The provisions of these laws applied to all employers except those employed in armed forces or as domestic help. Thus, over the span of 1948 to 1968, the labor relations scene changed dramatically from one where there was little or no legislation to govern most aspects of employment relations to one where most aspects of employment relations were covered with specific laws. It is therefore appropriate to call this era a period of foundation laying for subsequent developments in labor relations. What do these laws provide as at the early 1990's? In order to answer this question sufficiently, it is meaningful to divide the labor legislation under the following headings for the discussions that follow: •

laws affecting employment conditions'. Factories Act, Employment Act, Employment Agencies Act, The Finance (Payroll Tax) Regulation, Children and Young Persons Act, Regulation of Employment Act, Skills Development Levy Act, and Workmen Compensation Act;

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348 •

laws affecting retirement: Central Provident Fund Act;

•

laws affecting collective Disputes Act;

•

laws affecting Workers Action: Trade Unions Act, Trade Disputes Act, and Criminal Law (Temporary Provisions) Act.

bargaining:

Industrial Relations Act and Trade

The Constitution of Singapore provides in its articles 10, 12, and 14 three very important provisions. "All forms of forced labour are prohibited." Discrimination on the basis of only religion, race, descent, or place of birth is illegal: there are no laws separately established (as in civil rights laws in the United States and anti-discriminatory laws in several democracies) to enforce these provisions. Finally, freedom of speech, assembly, and association provided for in the constitution finds its expression in the Trade Unions Act which specifically regulates the expression of workers forming an association for improving their general working lives. The Factories Act provides for the establishment of safety standards at places of work through the compulsory registration of and periodic inspection of premises where there are safety hazards (prime movers, electric generators/motors, electrical installations/equipment and transmission machinery or dangerous substances). In addition the factory inspectors ensure that there is adequate general cleanliness, no overcrowding, sufficient ventilation/lighting, drainage and sanitary facilities. The Workmen Compensation Act specifies the entitlement for compensation for injury sustained at work while also making employer responsible for medical cost and insurance arising from such events. These entitlements of minimum entitlements are separate from civil claims, which can be instituted against the employer. The Employment Act is probably the most important document as it covers most aspects of employment relations. It sets out the terms of the contract of service by specifying what are legal contracts and legal termination of contracts. Next it sets out hours of work, rest days, holidays, and salary payments. It also regulates the employment conditions of young children (the Children and Young Persons Act further applies and prevents child labor) and females in certain undertakings. The Act also specifies medical leave, maternity benefits, and sets a labor court to which complainants (employers and employees) may apply for redress expeditiously without recourse to the more expensive judiciary. A recent amendment in 1990 to this act regulates part-time employment by laying the terms and benefits for such employees. The laws provided in this act had the important effect since 1968 of guaranteeing certain minimum decency of employment terms for all workforce. The act also undermined, the unionists claimed, their ability to negotiate on these items. This is no longer true as these are minimum conditions which could be enhanced by collective bargaining if a trade union exists or by unilateral actions of management.

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Employment Agencies Act is designed to license bona fide firms to engage in manpower recruiting services to protect those seeking employment from being cheated by such agencies. The Regulation of Employment covers the employment of non-nationals in Singapore establishments through a process of work permits (for low-level jobs) and professional visit passes for skilled and professional workforce. The Skills Development Levy Act provides for compulsory payments by employers with 50 or more employees to contribute to a fund from which firms could claim most of the expenses of training workers on job skills. This has proven to be an important instrument of upgrading skills on the job. The Finance (Payroll Tax) Regulation provides for a compulsory levy of a tax on the payroll of employers, this is meant as a tax revenue procedure and is a cost for firms. These laws considered above established what is increasingly recognized as modern terms of employment, working conditions, and promoting skill-acquisition for the entire workforce. In a sense it heralded the standardization of service terms and working conditions. As the economy reached full capacity and unemployment declined since 1979 to the low rates of two to three percent, most employers have found ways to enhance the terms of employment to keep the workers from quitting. The trade union, where it exists, lost these and other familiar items for including in the log of claims, as these items have been legislated if the employers are reluctant to enhance them. The Central Provident Fund Act provides for the employee to contribute almost a fifth of monthly income and the employer to contribute a matching amount toward an old age pension. The employers' contribution is now 17 percent. Those in the age group 55 and above contribute lower amounts. This takes the form of monthly contributions to the Fund, which centrally manages the contributions in the individual's accounts. The contribution, which is substantial at 40 percent of income, is kept until the age of retirement at 55 when the balance standing to the credit of the member could be withdrawn subject to some conditions. Prior to retirement the member could utilize the balance in his/her account to (i) purchase a house; (ii) buy certain approved stocks (88 shares and mutual fund) with drawings from account not exceeding 40 percent of the ordinary account balance; and (iii) pay for medical expenses; or (iv) pay for certain educational expenses of the member or member's children. This legislation has enabled thrift and enhanced workers' ability to own their own homes through drawings from the Fund. Several financial institutions offer attractive annuity plans under which the withdrawn sum or part thereof can be placed in an annuity scheme for regular monthly income after retirement. There are no unemployment benefits in Singapore, and social welfare programs are meant for the destitute and not the average citizens. In this context, the pension provisions under this legislation have become social programs for thrift, home ownership, education, and old-age medical benefits. The medical expenses are from a residual sum of $30,000 held by the Fund for medical bills,

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the unused sum will be refunded to the surviving relative of the member. Through this legislation a number of social policy objectives have been achieved without recourse to broad-based social welfare, public-housing subsidy, and national medicare. Lately (from July, 1990) the members also get the chance to pool their risk of large expenses on account of serious illness under an insurance scheme paid from the member's balance in the account. Two important pieces of legislation - Trade Disputes Act and Trade Unions Act - regulate industrial action and collective representation, respectively. Industrial action (see below) is recognized as legitimate under certain circumstances when all recourse to procedure failed. Industrial action is disallowed under certain other circumstances, e.g., while the dispute is under review in appropriate institutions such as the Arbitration Court. Strikes initiated in support of a dispute within a trade or industry is outlawed, thus making sympathy strikes illegal. Further the employees working in certain essential services (such as police force, air controllers, water and electric works) are required to give advance notice of their intention to take industrial action. Industrial action is not meant to be resorted to as a first-line weapon until all other recourse (collective bargaining in good faith, conciliation, arbitration) have been exhausted. This had a far-reaching effect since 1960 of reducing the industrial strikes between workers' groups and management. The Trade Unions Act, first passed in 1939, but implemented only since 1948, had ushered in freedom of association for workers. In its present form (the last amendment was in 1985) it provides for registration of legally-established trade unions, monitoring of their finances and management (there is a procedure to keep persons with criminal records from holding office in unions), establishing the rights and liabilities of trade unions and protecting the office-bearers from victimization by employers. In its unamended version trade union definition included the objective of imposing of restrictive conditions on the conduct of trade or business. In the latest amendment, the reality that trade union is a general-welfare organization promoting good industrial relations to improve working conditions, economic and social status, and achieve productivity are recognized. Trade union activities on establishing a new union, election, or decision on industrial action are required to be taken through secret ballots. This regulation was made as far back as 1961. Over the years and since 1981, the NTUC has emerged as a powerful control body. As almost all unions are affiliated to it, each union is required to seek the approval of the central body's industrial relations panel for proceeding towards taking industrial actions by individual unions. The Industrial Relations Act provides for the regulation of the relations of employers and employees and the prevention and settlement of trade disputes by collective bargaining, conciliation, and arbitration. This piece of legislation has been recognized as central to the peaceful industrial relations Singapore has enjoyed since 1964 as well as one that led to industrial peace with justice for all

351

Singapore Employment Laus •

Factories Act

•

Regulation of Employment Act

•

Payroll Tax Regulation

•

Children & Young Persons Act

•

Workmen Compensation Act

•

Skills Development Act

•

Employment Act

Retirement Benefits Laws • Central Provident Fund Act

CollectiveBargaining Laus • Industrial Relations Act » Trade Unions Act

Industrial Action Laus • Trade Unions Act • Trade Disputes Act • Criminal Lau Act

Trade Disputes

Figure 1 : Labor relations laws in Singapore

parties. The central provisions of the Act are (i) to register and give the force of law for all freely agreed to collective agreements; (ii) to establish conciliation machinery at the Ministry of Labor to bring disputing parties to agreement; (iii) where necessary, mandate compulsory arbitration if the Minister deems it necessary or the party/parties to the dispute consider it necessary to obtain an arbitrated award from the Industrial Arbitration Court; and (iv) enacting into law certain rights of employers (Section 17 [2]) including the right to hire and fire, which cannot be a subject of negotiation. The implementation of these laws tended over the years to persuade disputing parties to resort to conciliation whenever free collective bargaining did not lead to agreement. Trade disputes could be settled without recourse to industrial action. Hence, one finds the importance of this legislation as a center-piece for making the Singapore labor scene conducive to foreign multinational investment, which has led to substantial economic development. See Figure 1 for a summary of legislation on labor relations. In concluding this sub-section, the reader may have noticed that the legislative efforts have been in the direction of quickly bringing in decent standards of working conditions while promoting the workers' organization to seek collective agreement with little or no recourse to industrial action. The laws passed and implemented helped to establish norms or rules of conduct that appear to have promoted both decent working conditions and labor peace over the short span of about 40 years, much shorter than in any other countries in the developed and few developing countries.

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General Institutional Arrangement Labor is currently organized into a central national body, the National Trade Union Congress (NTUC) which acts as the equivalent of such bodies in other countries (AFL-CIO in the United States, for example). The national body is elected every three years in a triennial congress of delegates representing individual trade unions, which are registered under the Trade Unions Act. Almost all trade unions are affiliated to the NTUC, but in the 1950s there was a competing federation (the SATU) with a different political ideology to which some unions were affiliated. Individual unions - there are 74 of them - are organized as (a) house unions of large enterprises; or (b) industry unions each of which covers a particular industry, for example, banks. Industry union would consist of branch unions at company levels, if the workers in those companies have been given recognition through secret ballot to organize a union. The NTUC is headed by a chief executive and secretaries for labor relations, education, organizing, etc. Since 1982 the chief executive is a person who is concurrently the Second Deputy Prime Minister, a cabinet member in the government. The co-optation of trade unions through the process of certain key members of parliament holding executive positions in the NTUC has strengthened the ability of the ruling government to monitor and sustain workers' aspiration while it also helps to control the union movement from developing on an independent line. The employers are not as tightly organized as the labor movement. There is a national association of employers for the specific purpose of representing themselves against the labor movement. The Singapore National Employers' Federation (SNEF) was founded by a merger of two different bodies. Today it acts as the industrial relations and training forum for some 1035 members, who are medium to large enterprises employing some 15 percent of the labor force but accounting for probably a third or more of the industrial output. The SNEF is organized on industry lines, and is headed by a full-time professional labor relations expert and assisted by other full-time employees. This body services the members as a clearing house for employers' stands on labor matters, as for example, the quantum of annual wage increase they think is reasonable in a particular year (usually in July). Additional work they do is the day-to-day assistance the SNEF professionals provide to member companies in collective bargaining stands, wage matters, training, etc. Members pay a fee for these services. Most multinational corporations are members of this body as the SNEF has a fund of local knowledge and expertise on labor matters. In addition there are several Chambers of Commerce that represent employers' trade interests. The regulatory institutions are the Ministry of Labor (MOL), departments for conciliation, safety and health, labor court, the Industrial Arbitration Court (IAC), the Judiciary, the National Wages Council (NWC), and the National

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353

Figure 2: Institutions for labor relations in Singapore

Productivity Board (NPB). The MOL carries out the usual functions found in all modern States but it also conducts the labor court for minor employer-employee matters, a sort of petty claims court, and the conciliation function which is so essential in Singapore to bring disputes to settlement and finally to collective agreement. The MOL also supervises the NPB whose main task is to effect programs for productivity improvements across the economy through worker training and national movements for productivity consciousness. The Industrial Arbitration Court is a court of last resort for disputing parties to seek award if the parties felt that compulsory arbitration is probably the better recourse than industrial action. Civil law proceedings on labor matters can be taken up within the Judiciary though this avenue is not resorted to often at all. Finally the National Wages Council is organized through equal representation by labor, government (as a major employer-regulator), and the employers. It meets every year around April to June to determine a national guideline for wage increases consistent with productivity gains, economic growth, and the state of the economy at that time. This body's guidelines are then taken up by organized labor to negotiate agreements on annual wage increases in the form of increases in the pay levels and end-of-year bonus payments (referred by the euphemistic term of "wage supplement"). Figure 2 above lists the major institutions in Singapore for managing the labor-management relations. Most of these institutions as well as the norms of behavior of these have evolved in the last 25 years in most cases, and in some cases much later (NWC started in 1972). A pattern of national ethos has emerged today out of the practices and struggles these organizations have gone through over these years. The resulting ethos and norms have more or less

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Table 1: Key economic and labor statistics:

Singapore

1970

Population (Ό00) Employment (ΌΟΟ) Unemployment Rate GNP (Million $) Trade unions Trade union members Mondays lost in disputes (No) Balance in CPF (Million $) Annual Average Wage

2,074.5 723.3 43,655 6% $ 5,861 102 112,488 2,514 (486) $ 777.5 $ 3,950.00 plus bonus

1980

2,413.9 1,093.4 6,305 3.5% $24,188 83 243,841 0 (484) $9,551.2 $ 8,400.000 plus bonus

1989

2,700 1,277.3' 1,885 2.2% $ 56,347 74 210,000 0 (366)2 $ 36,000 (est.) $ 16,700.00 plus bonus

1. Manufacturing (20%), services (21%) and commerce (23%) employ 73% of 1.277 million workforce. 2. 1988 figure.

crystallized such that there is a greater consensus of their roles today than were possible in earlier times. Singapore is a highly urbanized and today very modernized nation with 2.7 million people living on 627 sq. km. of land surrounded by larger countries, namely Malaysia with 17.4 million people in the North and Indonesia with 174 million people to the South and West. Its political history of limited self-rule from 1954 and full independence from 1965 provides a short span of economic history which forms the setting within which labor relations take place. Table 1 provides key statistics on the Singapore economy and labor over the years 1960 to 1989. The employed persons in Singapore total 1.277 million today. Of these about 200,000 workers would be employees holding permits to work in Singapore. Workers and professionals from other countries are permitted to work in Singapore as there is a dearth of workers in the fast expanding economy. Unemployment, therefore, is almost non-existent in the last decade except when there was a recession in 1986-1987 when unemployment increased slightly. Per capita GNP is about $21,000 (US $12,000) and has been increasing over the years as Singapore continues to find its niche in (a) high value-added manufacturing; and (b) international trading. The number of trade unions is on the decline as more and more unions form house unions from several individual unions and as the industrial structure is

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changing in Singapore especially since 1979. Union membership has been historically on the rise (except during recessions) when the labor force was growing rapidly: today 210,000 workers are union members from a total of about 850,000 unionizable members of the workforce. With the emergence of a national ethos (partly attributed to the new laws) of seeking dispute settlement through conciliation and arbitration, the man-days lost due to industrial disputes have declined, though the number of disputes has not declined at the same rate over the years. The social security policy (housing purchase, health, education, and retirement) based on the Central Provident Fund system has grown to be a very important economic stabilization institution for workers. With about two million members, the balance per member is substantial at $18,000. The economy is mainly driven by manufacturing, international trade, and servicing, all of which are increasingly becoming directed at high value-added sectors. Hence, the workforce is trained continually at a higher level of general education in the schools, as well as technical/on-the-job training at technical institutions and establishments. Manufacturing, trading, and service sectors would be the engine of growth for the economy in the future. Labor relations in such an economic setting dramatically changed from what it was in the early 1980s.

Nature of the Labor Relations Process The labor relations in the unorganized (i.e., not represented by trade unions) sector is largely determined first by the free-market forces of supply and demand factors which result in large labor turnover across establishments; in some low-skill enterprises labor turnover of 50 percent is common. Thus, job mobility both serves to regulate the going rates idea given the relative ease of moving to new jobs without having to move your residence, as most places are easily accessible via good bus, rail, and road systems. Another factor is the fact that one's retirement contribution under the Central Provident Fund system is not affected by tenure of service to an employer. Over and above these forces of a market mechanism, employers appear to adjust wages in terms of their ability to pay consistent with their profitability and the national wages guidelines released in the second quarter of each year. Increasingly the NWC guidelines appear to be generally acceptable as fair increases, provided the employer is not losing money. Hence, employers in the unorganized sector find some sort of equilibrium wage level that will retain their existing workforce consistent with what the larger community considers as a norm each year through announced guidelines. Over the years inflation has not been a major factor except in 1973-1975 and again in 1982. So increases in price levels form only a minor factor in wage settlements.

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Figure 3: Organized sector collective bargaining in Singapore MOL = Ministry of Labor IAC = Industrial Arbitration Court

Organized labor goes through a more formalized system of wage settlement literally through formal procedures. Also, the evolution of a national culture of seeking agreement without recourse to industrial actions (though the industrial action is legitimate in law) has brought with it certain modes of behavior which facilitate agreement. The organized sector is made up of 74 trade unions and their branch unions on the employee side, while the employer may be represented by the SNEF professionals in the collective bargaining process. We shall first establish the structural features of collective bargaining before examining the nature of the process. To start with, the regulation/laws governing collective bargaining are as follows: see Figure 3. The principle of free bargaining by both parties (union and employer) still remains the foundation of collective bargaining in Singapore despite the incorporation since 1960 of conciliation and arbitration as mechanisms for dispute settlement. By far almost three-fourths or more of all collective agreements are negotiated between the parties on a free bargaining basis leading to a collective agreement which is then submitted to the IAC by parties for certification and registration as an agreement. Once registered, the agreement remains in force as an enforceable legal document (IAC has power to enforce) for the currency of the agreement, usually for two to three years. Prior to expiry the parties could either renegotiate a fresh agreement if circumstances have changed, or vary the existing agreement and register it for another period. This has been the primary route of resolving labor matters collectively, and still remains the principal focus of collective agreement in most cases.

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While parties are engaged in this free bargaining phase, unions increasingly use the centralized services of the national union to draw in expertise of industrial relations officers or to make use of the centralized computing facility for data analysis/retrieval. The NTUC, the national body, operates a computer network that is linked to some unions now for sharing information and systems. On the employers' side, smaller-to-medium sized firms seek expertise of the SNEF to conduct their collective agreements. Collective bargaining is performed in the usual manner of parties making the claims, and judiciously finding some common ground for agreement on all or most items in the log of claims as soon as it is considered practicable to both parties. What is new is only the manner in which the expertise is being brought in by a more organized trade union so that employers are required to demonstrate equal expertise of reasoned arguments in rejecting claims on a demonstrable basis. However, as pointed out, certain managerial prerogatives (in Section 17 of the IR Act) cannot be included for agreement. The issues considered excluded are on hiring, transfer of employees, promotion, dismissal (except for reasons of union activities) and allocation of duties consistent with employment. These are touchy and emotional issues, which were considered by the regulators as infringing on the employer's rights so that these were excluded from being subjects of union discussions for agreement. Since 1960 and increasingly now, the parties failing to reach agreement as free agents of a bargain could call on the Ministry of Labor for Conciliation to resolve disputes if collective bargaining failed. See the part marked (A) in Figure 3. This is provided for in Section 20 of the IR Act. The commissioner, on receipt of a notice from the parties, could direct the parties to seek conciliation to reach agreement, as a trade dispute is deemed to exist in this instance. The introduction of conciliation had made it necessary for employers to have sound reasons for rejecting reasonable union claims as it similarly constrains the union to be realistic in their claims. So, it introduced the principle of reasonableness on both parties, which in itself enhances the chance of final resolution. Second, this makes it very unlikely that trade disputes may lead to industrial action because of the ameliorating effect of the conciliation officers. Union's industrial action following conciliation would make the industrial action illegitimate in the eyes of the public more so than would be a case if no conciliation effort were made. This in essence is the main reason why industrial action dwindled to zero now. Under Section 31 of the IR Act, parties to a dispute could seek redress through an award (Sections 36-40) to be handed down after both sides had opportunity to present their cases to the Industrial Arbitration Court. The IAC, as a quasi-judiciary body, is empowered to judge industrial disputes and to make binding awards including enforcement of duly registered collective agreements. Recourse to the IAC is not generally a preferred option but is sometimes necessary on points of law, or because there are genuine reasons to seek

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judgement on issues. Very few cases end up this way, and are exceptions to the general case of free bargaining. We shall refer to conciliations and arbitration as not free-bargaining. Provision for conciliation is perhaps the most critical provision that broke the impasse of getting parties to agree. Voluntary conciliation by a prominent third party, a principle observed in some countries, has been given the force of law when conciliation was centralized at the Ministry of Labor, whose job it is to promote industrial peace. All those establishments with recognized unions seek collective agreement within the broad framework discussed above on agreements every two or three years. In addition, the three parties (labor, management, and government) collaborate collectively to arrive at a guideline for a general wage increase every year. This takes place within the set up called National Wages Council where all parties are equally represented with an additional chairman. These guidelines on (a) annual wage increases to be added to the pay scale; and (b) annual one-time payment of bonus are ironed out in April-June to serve as guidelines for both organized and unorganized sectors. The organized sector then enters into good-faith bargaining to reach agreement (with or without conciliation/arbitration) on the annual wage increase: in the 1980s most organized and unorganized sectors implemented the NWC guidelines with or without amendments. This example of centralized bargaining is unique since 1972 in Singapore and is in many ways comparable to the "spring offensive" for wage increases in Japan. In Japan it is not centralized bargaining. One feature worth noting is the voluntary cooperation amongst the parties to collectively decide on this important annual decision. This has enhanced the increasingly collaborative rather than confrontational brand of collective bargaining in Singapore, which further eroded historical tendencies up to 1966 of confrontational style of collective bargaining. The agreement between parties for NWC wage increases are signed each year with the IAC. Industrial action (Section 2 of Trade Disputes Act) is legitimate for all trade unions and by extension to the establishments, where a trade union exists, as lockouts. The organized groups in essential services may not take industrial action or, where such is permitted, only after a period of notice is given of intention to strike in order to avoid inconvenience to the public using the essential services of police, water-electricity, transportation, public cleaning, etc. About 5 percent of the workforce may be covered by this restriction. Unlike most countries, general strike and sympathy strikes are forbidden by law (as illegal under Section 3 of the Act) as is a strike organized without a majority of workers secretly voting for a strike. Instigation to engage in an illegal strike or for conducting such strikes, are punishable offenses by imprisonment not exceeding six months or a fine not exceeding two (five for instigation) thousand dollars or both. Thus legitimate strike activity is for furtherance of trade disputes

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within a firm which could not be settled by conciliation, and the parties did not want to seek arbitration. Such strike activities were rampant from 1948, when civil liberties were reinstated after the Second World War, right up to 1960. Strikes tended to decline since 1960 essentially with the introduction of constraints (conciliation and arbitration and since 1968 the standardization of minimum decent conditions of work) on free bargaining. Strike activities have tended to rapidly decline from 1960 to 1989. Using the broad definition of trade dispute as potential stoppage of work, it appears that the number of disputes have halved since 1960-1965 period. Man-days lost due to strike activity registered the biggest decline from almost 6,000 to under 2,000 and thereafter to zero. A reasonable question to ask is why industrial disputes are still around at about half the level of early years, but strike activities have declined to zero. There are several economic and one ideological reason for this trend: the legislative reasons have all been explained above. The social program of home ownership via pension fund withdrawals has made an economic link between being employed and owning one's own home. Singapore workers own their homes today (with about 92 percent of them owning) compared with less than 20 percent in 1960. The CPF-home ownership has built an economic stake in the economy. The national wages council's stewardship of wage increases has led to substantial increases in wages (see Table 1 earlier) over the last 18 years: the wages doubled in the 1970s and in the 1980s, have increased by 100 percent over the 1980 level. A third economic reason is the subtle market force (coupled with job mobility) of a limited labor supply, hence firms looking for more and more workers. This has led to employers' willingness to pay more wages and other benefits without recourse to strike action. A consensus appears to have emerged that collaborative efforts (as opposed to a confrontational approach in most Western many developing countries, or a political approach as in centrally-planned economies) to settle disputes within a nationally-determined guideline of wages, is more conducive to economic well-being rather than one based on a stop-go confrontational style. There are several hundred collective agreements in force in each year to regulate the salary levels, benefits (such as medical, vacation leave, etc.), and terms of employment. All collective agreements must be registered with the IAC for them to have legal force: these are printed by government printers and published as enforceable rules governing employer-employee relations in the organized sector. Certain recurrent patterns are evident in all collective agreements. First, in each collective agreement, there is a statement of the recognition of the entities to the agreement with a recognition of the union as a sole representative of workers. A statement is usually made that the agreement is in full settlement of all claims made by the union. This is followed by matters of

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Table 2: Breakdown of collective agreements and awards: Singapore Year

Collective Agreements No. Workers

Arbitration Awards No. Workers

Conciliation at MOL (Nos)

I9601 1965 1970 1975 1980 1985 1988

5 196 142 246 394 359 344

1 49 43 73 94 35 22

804 801 486 709 484 340 366

1,199 41,467 19,772 54,736 60,343 140,568 69,588

16 6,303 53,603 16,003 20,806 3,214 4,946

MOL = Ministry of Labor 1. For 4th quarter, 1965.

salary, benefits, covered job titles, grievance procedures, and resolution through IAC Referee where there is conflicting interpretation over the terms of the agreement. Thus, the pattern on a typical agreement is fairly common, with the exception that managerial rights cannot be included in the agreements. The standardization of most conditions of work in the 1968 laws tended to shorten the list of items covered, as those items already covered in law are no longer covered in an agreement. The pattern of collective agreement behavior today results in about threefourths of all agreements reached under free-bargaining, without resort to conciliation/arbitration (see Table 2). Arbitration is rare, and when resorted to, is based on issues that require interpretation. Conciliation accounts for the rest of the agreements. No one appears to want to resort to industrial actions, no lockouts, no strikes. The ideology that we mentioned has emerged to sustain this pattern and the institutions are experienced and committed to further continue the pattern established now. Short of a radical political change the pattern is set to continue into the 1990s.

Industrial Relations Actors It is fashionable in academic works to refer to the three parties (labor, employers, and government) as industrial relations actors whose interaction among themselves within a given ideological (ethos) framework leads to the establishment of norms for labor relations in a country. It is perhaps an enriched way of drawing out the interrelationship among competing agents for resolving

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real day-to-day issues at work. Let us first examine the trade unions as organized labor. These have long-established historical roles as the agents of the workers.

Role of Trade Unions The role of the trade union is set out in the Trade Unions Act, Section 2, as having the principal objective to regulate relations between workmen and employers for any or all of the following purposes: a) b) c)

to promote good industrial relations between workmen and employers; to improve the working conditions of workmen or enhance their economic and social status; or to achieve the raising of productivity for the benefit of workmen, employers, and the economy of Singapore.

This amended objective of the union is very broad-based and recognizes two very different roles of trade unions from what is considered the traditional objectives of trade unions (Anantaraman, 1987; and Adams, 1981). First, it recognizes (b) above, which is the wider socio-educational and even recreational activities of the trade union. Over the years since 1969, the trade union movement has diversified its role to include the general welfare of the workers. Thus, they organize child-care creches, dental clinics, insurance companies, worker-owned taxi-cab services, supermarket chains to sell daily necessities at low profits, educational subsidies, and recreational activities. Some purists have reacted unfavorably to these amended objectives of trade unions (Wilkinson, 1986). And, some theorists - whose line of argument leans towards Marxian Labor concepts - refuse to accept that there is commonality of purpose and thus favor the objectives of restricting trade practices as the sole aim of unions (Hyman, 1982). For example, let us look at the finance of NTUC, which is healthy: net assets of $24.2 million with annual income of about $2.3 million in 1989 financial year. Recall there are only 212,000 members, its insurance company provides life and other insurance at relatively cheap premium. The supermarket chain with conveniently located premises in residential towns sells family provisions and clothing at very competitive prices with part of the profits redistributed as rebates at the end of each year. There is a recreational complex where the members can enjoy first-rate holiday residential facilities. The point raised is that the NTUC had entered into a wide range of activities to serve the members and the inclusion of objective (b) in the Trade Union Act above recognizes this. This national labor movement has been co-opted to serve the interest of the nation in the productivity increases. The consequent economic betterment is recognized as reasons for wage increases annually through the NWC guidelines. Hence, it is within the scope of labor to attain the object of productivity

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increases and enhanced national economic well-being. These arguments have been applied to direct the labor movement to take on non-conventional roles not generally found in trade unions in most countries. As noted in a previous section the labor movement is organized at the national level as a central organization to which legally-established individual house unions and industry unions seek affiliation by paying a per capita contribution to the center. Presently there are 1.3 million economically active persons in a population of about 2.7 million. The labor force is 1.28 million. This represents a participation rate of 47.41 percent, which is slightly less than that of Hong Kong which has one of the highest participation rates among developing countries. Trade unions have generally declined over the years as more of them amalgamate to form house unions, which are unions of all employees within a large firm. House unions have been promoted since 1984 as a means of encouraging more interaction and labor-management cooperation at the firm levels and as a single union representing all workers who are more likely to be able to cooperate with employers for the common good. Membership in unions is restricted to those firms where there are at least seven persons wishing to form a union: firms with fewer than seven may not be able to form a branch union. Hence, the unionizable workforce is much fewer than the total workforce of 1.277 million: an estimate is that about 850,000 workers may be organizable. Thus union density is about 25 percent of the unionizable workforce (16.5 percent of all workforce). This is very low compared to many developed countries but it is high amongst economies of similar size and stage of development (Johnson & Ariff, 1988). Not belonging to a union does not mean that a non-member enjoys any less benefit than a member. This has been blamed for the reluctance of workers to join the union.

Role of Government and Third Party The active participation of Government (with a capital G) has helped to undermine the erstwhile confrontational role prevalent until 1966. The role of government appears to be two-fold. In the first, government [i.e., the three governments of the Workers Party, the Alliance Party (1954-1959) and of the Peoples' Action Party (1959-present)] as institution-builders was quite evident, and is still evident today when fresh issues crop up. The 1954-1958 era witnessed the establishment of labor laws that laid the initial foundations for building the institutions needed to conduct labor relations. This effort was speeded up during the 1960-1968 era with the establishment of clear-cut objectives for the various actors and rules of the game (conciliation if collective bargaining failed, national norms for wage growth, etc.). Hence, institutionbuilding was seen as the primary role of government. Ministry of Labor has a

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corp of professionals who, as third-party, provides conciliation services to further collective agreement. The second role was the self-declared role of moving the industrial relations from confrontation to cooperation. Let us call it an ethos-building role, not necessarily liked by governments in similar situations (for example the Australian Labor government in 1985-1990). Massive political action was mounted along with good dosage of propaganda to convince the labor movement to shift to cooperative, non-adversarial relation with government as well as employers. This move led in 1982 to the complete co-optation of the NTUC whereby the Second Deputy Prime Minister was named for election to the position of labor chief, the political party too accepted the need for consideration of workers' welfare as a pivotal role of the party's role. Today not fewer than eight members (out of 81) of parliament hold executive positions in various union organizations. A third role of government is seen as the model setter for some, if not all, labor matters. Traditionally, the government adopted the NWC guidelines readily; it spends more on training its workforce; mounts productivity campaigns (quality control circles, work improvement teams, etc.), and social policies through CPF savings. Thus the government's role has been most crucial in the ethos-building area as it managed to change the nature of labor relations in the 1980s. This leadership role of government is likely to continue into the future. If anything, the government (collectively) provided stewardship in shaping the nature of industrial relations in the last 36 years. The present government had in fact played crucial roles in re-shaping the ethos of industrial relations while promoting joint basis (tripartism) for resolving industrial issues such as training, income policies, social policies, and so on. The trade union leadership has seized on the symbiotic party-to-labor relations to enhance their positions as equal partner in the three-way consultation on important issues. If anything, the government played a stronger role followed by the trade unions while the employers have been content to benefit from the industrial peace that was conducive to profit-making.

Role of Employers Employers - the SNEF and the chambers - have really had no clear forward roles in the labor relations scene as the pivotal role has been sort of hijacked by government and the trade unions. Employers are more concerned about cost of doing business in Singapore (in relation to doing the same business in other countries), and thus see a myopic role for themselves, namely to be reactionary to demands made by trade unions. They like clear-cut rules that leave no room for doubt and keep costs down. They lack generally the foresight to lead by

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example to get workers' greater participation. Hence, the role of business has been to guard against innovative labor relations program and to play a limited role of a cautionary interested party in the three-way discussions (on worker participation, see Cheng and Ariff, 1991). However, certain new trends are emerging among more profitable firms. Some enlightened employers see a proactive role of motivating and retaining labor, which would otherwise find itself in another firm for higher wages. These employers have innovative training programs, participate in gain-sharing programs (e.g., Mobil in SMART program) or greater safety awareness programs, etc. Thus, employers are beginning to find proactive roles to train, motivate, and retain their workforce in a very competitive world.

Current Trends in Industrial Relations It is always risky to make forecasts about what trends are developing in the field of industrial relations. Singapore's economy is dependent on international trade (total trade amounted in 1989 to S $184 billion or US $105 billion) with the United States, Japan, the E.E.C, countries, and Malaysia, to a large extent. In fact about two-thirds of the gross domestic product is attributable to the international trade of firms exporting to these countries or firms importing for reexport to several other countries in the region. So, in reality, the trends in Singapore are impacted upon by the economic and sometimes political factors in the trading countries. The major trends that are evident today may be grouped as: • • • •

labor availability and labor shift; rising labor cost issues; labor productivity and gain sharing issues; declining trade union membership.

These issues are today evident from discussions about (i) rising retirement age; (ii) legislation to encourage housepersons to take up part-time employment; and (iii) a slow shift in employment from manufacturing to service sectors. The massive immigration gains up to 1956 and the consequent baby boom of the young immigrants provided a large increase in the availability of labor right up to the end of 1970s. Since 1980 Singapore emerged as a favorite among newly industrializing economies (NIEs) for locating production facilities. The labor force was not sufficient to provide an adequate workforce for the industries. As a result, most major corporations had moved to neighbouring countries for labor-intensive operations and retained the testing, servicing, and management activities in Singapore. The legal retirement age in Singapore is 55 and an issue now being bandied around is to raise the retirement age to 60 as it would

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increase the supply of labor for further years. Pressure is building to pass laws to increase the retirement age. Meanwhile, the cost of employing persons beyond 55 has been reduced through reductions in compulsory contributions toward pensions as these employees would have actually drawn their pension balances in the CPF on attaining age 55. Thus a new trend likely to develop in the 1990s would be the employment of older persons. The regulators have relaxed the conditions for employing persons from foreign countries by permitting more industries to employ foreign workers as of 1990. Persons with requisite skills or professional experience are given residential status (this included an attempt to encourage Hong Kong residents to migrate to Singapore). In 1989, 546,000 females aged 15 and above were economically inactive: this represents 54 percent of females in that age-group. The comparative figure of males is 21.4 percent. A major reason for the low rate of economic participation by females is the responsibility of child-rearing. To alleviate this, employers, the government, and trade unions have organized child-minding centers so that females could return to the workforce. This is likely to be an important source of labor availability for the future. This will bring with it associated problems of female employment that are likely to receive increasing attention in labor relations meetings. Recently in July 1990, new laws have been passed (amendments to Employment Act) making terms and conditions for part-time employment attractive. Presently three percent of the total workforce are part-time employees of which two-thirds are women earning a median salary of $250. It is expected that these measures would increase female participation in the labor force in the 1990s. Between 1980 and 1990, there has been a 5 percent increase in the participation rate of females in the labor force and it is likely to increase in this decade. It has recently been observed that service sector employment is increasing at a faster rate than the production workforce. In 1980 the service and production workers represented 10.4 percent and 41 percent respectively of the workforce. Today the respective numbers are 13.5 percent and 35 percent. As manufacturing firms upgrade themselves to be service, testing and managerial centers rather than labor-intensive manufacturing centers, the ratio of the production workforce is declining over the years, and is likely to decline further - especially with robotics and other automation programs. The industrial relations scene is likely to be increasingly shifting as the basic trend establishes itself in the 1990s. Thus in the area of labor availability and mobility, structurally it appears that more workers will enter service sectors; and the production workers would be better trained to manage more automated/service work stations in the future. Part-time employment increases and employment of older workers beyond 55 at renegotiated terms (subject to standard legislation) will form the bulk of the workforce entering the supply side. Net migration will also play an increasing role but its effect will be in the skilled and professional job sector rather than unskilled sector.

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There is an increasing recognition that the labor pool is too limited for further economic development. Compared with more successful economies, Singapore not only needs more labor, also more land for further development. Hence, a recent trend is to twine the economy with neighbouring countries to jointly develop the economies, thus tapping on the abundant land and labor resources of two neighbouring countries (Malaysia and Indonesia). Labor cost has tended to rise over the years as the economy reached full employment in the mid-1970s, despite relaxation of rules for the entry of foreign labor. As firms shifted away from labor-intensive to high value-added manufacturing and servicing, the quality of labor has also increased through better training and higher skill development. Thus the twin forces of supply constraint and a better-trained workforce meant that wages should rise. These basic economic forces have been given added momentum through (a) compulsory cost increases for the employer through payroll levy, skills levy, and increases in C P F payments; and (b) national wage policies of annual wage increases consistent with productivity gains and economic growth. A major determinant built into the wage increases since 1972 is the productivity gains in the economy and in industries. Such continued attention to achieved productivity for wage gains has emphasized the need for productivity improvements from the labor force. In implementing the drive for productivity consciousness, a three-pronged strategy has been followed. First and foremost is the establishment of the dictum that the wage increases are closely tied to productivity gains. This is evident from the annual discussions and report on the NWC guidelines which consider increases in wages closely tied to the productivity gains and the overall economic gain in terms of G D P growth. For example, when the economy went into recession, no wage increases were recommended. Substantial gains in productivity are still the main story of the labor force. Relative to one to two percent productivity gains in Western developed countries, these numbers for Singapore are substantial. However, the current level of productivity is still below those of Swiss, Japanese, and Korean workforce. Hence, the possibility is that productivity will continue to lead as an important labor relations issue well into the 1990s. Gain sharing programs implemented in certain firms to share in the gains of productivity improvements have emerged as important industrial relations issue since 1987. More and more manufacturing (and some service) firms are using the expertise of the NPB to implement programs to involve workers in improving productivity and sharing part of the gains with labor under productivity agreements. Several plans are available. One that is smartly named is the S M A R T program implemented in Mobil Oil that is based on organizing the workforce into S M A R T teams of seven members to come up with cost-cutting and productivity improvement ideas. Part of the savings of such ideas are paid to the workers annually.

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It is evidenced from the foregoing discussion that efforts to get workers to participate in management of workplace issues have led to greater bipartite gains in some leading firms. More firms are likely to get involved in the future. Hence, productivity issues are likely to remain as a top labor relations issue because of cooperative ethos in union-management relations and the pre-eminence accorded to productivity for determining the wage increases at national and industry levels. Trade union membership has tended to decline during periods of poor economic performance (e.g., 1984) as more workers are laid off the payroll. The NTUC in its 1990 report has identified this as a major issue for the 1990s. For an analysis of trade union membership see Ariff and Johnson (1991). With an increased awareness on the part of the workforce that union membership did not accord special gains in the workplace, more and more workers are reluctant to join the trade unions. There is no closed-shop practice in Singapore and the terms of benefits negotiated by a trade union also apply in equal measure to non-members. However, the national labor movement has stepped up a campaign to increase membership at already organized firms and are trying to organize the unorganized sector. So, these efforts are likely to emerge as important industrial relations issues in the 1990s. Membership in trade union and an affiliation with NTUC today provides entitlement to a vast array of non-industrial relation benefits such as club membership, holiday chalets, insurance scheme, dental care at affordable prices, child-care, etc. So, it may be likely that the labor movement in Singapore will be able to arrest declining membership more so than is the case in other countries. But efforts to organize more non-members to join will feature prominently in the future and is largely dependent on the perception of union power.

Future Labor-Management Relations It is evident from the foregoing discussions that major changes have shaped the present labor-management climate in Singapore. From one of an intensely combative style of relationship in the 1948-1966 period, the modus operandi has tended increasingly towards • •

national consensus style tripartite cooperation on key issues with labor and government forming a symbiotic partnership on labor issues; and the emergence of national ethos favoring labor-management cooperation based on collective bargaining on industrial relations issues and guarded participation in non-industrial issues such as training, productivity, and management of workplace issues.

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These substantive changes of heart have been hard-won after years of rigorous revamping of the pre-1960 legislation, mode of working the system, and, in fact the mode of thinking. One can, therefore suggest that the major characteristics at the core of industrial relations are not likely to change in the future. What is likely to change are the employers' response to build on the new ethos and opportunistically involve the workforce for mutual gains through productivity actions. In conclusion, it may be permissible to suggest that the 1990s will see a characteristic change in the involvement of workers in non-industrial relations issues such as training for better skill, for productivity improvements, and for greater participation in the workplace. The limited supply of labor means that the firms providing good wages, benefits, and meaningful participation in work as incentives will manage to have an edge over the others in attracting, rewarding, and retaining the workers. In such a rational set up, changes are likely to be incremental and uninspiring but will lead to greater gains for the actors.

Acknowledgement I would like to thank Stephen Tai for the time he spent with me to clarify certain finer points of industrial relations. However, I take responsibility for any remaining errors.

References Adams, R. J. (1981) "Competing Paradigms in Industrial Relations". Working Paper, Series 190. Ontario: McMaster University, Hamilton, Faculty of Business. Anantaraman, V. (1987) "Models of Industrial Relations System: The Dunlopian Conceptualisation". Singapore Management Review, 9, 2, 35-46. Anantaraman, V. (1990) Singapore Industrial Relations System. Singapore: Singapore Institute of Management and McGraw-Hill Book Company. Ariff, M. and L. W. Johnson (1991) "Personnel Characteristics A s Determinants of Trade Union Membership in Singaporean Firms". Singapore Management Review, 13, 1, 1-10. Butterworth's Handbook of Singapore Employment Laws (1990). Singapore - Kuala Lumpur: Butterworth. Cheng, S. M. and M. Ariff (1991) "Survey Report: Singapore". In Asian Productivity Organization (ed.), Industrial Relations and Labour Management Consultation, Asian Experiences, 23-39. Tokyo: Asian Productivity Organization. Chew, R. (1988) "The National Wages Council: An Incomes Policy Experience". Unpublished Ph.D. Thesis. Singapore: National University of Singapore. Hyman, R. (1982) Industrial Relations, A Marxist Introduction. London: The MacMillan Press Ltd..

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Johnson, L. W. and M. Ariff. (1988) "The Determinants of Trade Union Membership in Singapore and Selected Developed Countries". The Southeast Asian Economic Review, 9, 1, 17-32. Wilkinson, B. (1986) "Human Resources in Singapore's Second Industrial Revolution". Industrial Relations Journal, 17, 2, 99-114.

Taiwan Gee San

Introduction The promulgation of the Labor Standard Laws (LSL) in July 1984 is a critical dividing line in the history of industrial relations in the Republic of China on Taiwan (hereafter abbreviated as Taiwan). This is not only because the LSL has changed the basic employer and employee relationship, but also because the political as well as the economic environment in Taiwan has changed considerably since that time. Today many people in Taiwan argue that industrial relations in Taiwan is at a crossroad. Traditional employment relations are no longer appreciated by the workers; at the same time, new employment relations have yet to establish themselves. Industrial relations in Taiwan is certainly in a period of transition.

A Brief Historical Overview Prior to the promulgation of the LSL there had not been an active labor movement in Taiwan; there were some labor dispute cases that occurred each year, but they were on a small scale. Hence, it is fair to say that industrial relations in Taiwan had been rather peaceful and stable. One of the most noticeable factors behind the industrial relations in Taiwan is that the whole economic structure in Taiwan has transformed rapidly from an agriculturaleconomy in the 1950s and early 1960s to an industrial-orientation in the mid 1970s. Along with this transition, the share of employment in the agricultural sector declined from 46.45 percent in 1965 to 18.85 percent in 1982, while the comparable share for the manufacturing sector increased from 16.26 percent in 1965 to 31.58 percent in 1982. The impact of this huge labor transition on the industrial relations in Taiwan is, surprisingly, negligible. For instance, the statistics from the Coucil of Labor Affairs shows that throughout the decades of the 1960s to 1980s, the annual total labor involved in labor disputes was less than 0.6 percent of total employed persons in each corresponding year. In many years, the relavant ratios were even as low as 0.1 percent. Why and how can Taiwan maintain such 'peaceful and stable' industrial relations? What are the relevant social, economical and legal factors which are critical to the stability of

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the industrial relations in Taiwan? We shall now address these factors in turn, in order to understand the formation of industrial relations in Taiwan.

General Institutional Arrangement It has been argued by some sociologists that the suppression by the ruling KMT Party in Taiwan has been one of the most important factor in "stabilizing" the industrial relations in Taiwan. Since labor unions, whether on the local or national level, have been tightly controlled by the KMT. Moreover, the KMT party has always actively supported its members' candidacy for the director and supervisor posts of the unions in order to gain control of them. The basic reason behind the ruling KMT party taking such an attitude toward union activities is mainly a result of the unpleasant experience that the KMT had in mainland China before 1949. During the period from the mid-1940s to the end of the decade, there were numerous occurrences of labor unrest against the nationalist government, which was under the control of the KMT party in mainland China. At that time, many workers were sympathetic to the revolutionary movement, which was led directly or indirectly by the Communist party, whose efforts were aimed at countering the deteriorating economic situation and growing level of corruption in the government. This anti-nationalist labor movement, together with the bankruptcy of the economy and the major military defeat of the nationalists to the Communists during the civil war eventually led to the retreat of the nationalist government to Taiwan. During the cold war period of the 1950s and 1960s, the Communist regime in mainland China and the nationalist regime in Taiwan were extremely hostile to each other. And for fear that the Communists might use labor unrest tactics to undermine the stability of the government in Taiwan, union activities were tightly controlled by the government. As a matter of fact, not only is the unions' leadership tightly under the control of the ruling KMT party, but the KMT has even colluded with big business in suppressing any possible situation of labor unrest. Secondly, it has been argued that, prior to 1987 when Taiwan was still under the shadow of martial law and when labor unions were not allowed to engage in strikes, labor unions in Taiwan were deprived of their collective bargaining power. As a result, workers in Taiwan have been, and still are, generally not interested in joining unions. The impassiveness of the worker toward unionization has created a vicious cycle where the functioning of the unions has not only been paralyzed but also where the control of the KMT party over them has been enhanced. Clearly, the ruling KMT party is mainly responsible for the inactiveness of the labor movement in Taiwan.

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Economists, however, try to explain industrial relations through the use of economic analysis. San (1987, 1989) argued that there are three other economic factors which are relevant to the inactiveness of the labor movement in Taiwan. Firstly, the economic structure in Taiwan is critical to the nature of Taiwan's industrial relations. One must notice that the majority of the firms in Taiwan are small and medium-sized enterprises (SMEs). Statistics show that 99 percent of the enterprises in Taiwan have less than 500 employees or, alternatively, roughly 77 percent of the workers are employed by firms which have less than 100 workers. It therefore is very difficult, if not impossible, to organize a strong union within an SME. The difficulties that prevent the formulation of strong unions may be a result of different factors. One possibility lies in the rather effective/direct communication channels within the SMEs used to solve labor problems so that labor disputes are thwarted early. Another reason may be a result of the lack of economies of scale needed to foster any type of labor movement. A third possibility may be a combination of the above. Secondly, the labor movement turnover rate is rather high in Taiwan. For example, the average accession rate in the manufacturing sector for the period from 1983 to 1985 was 4.13 while the corresponding separation rate was 3.83. The labor turnover rate can thus be regarded as another "difficulty" preventing the formulation of strong unions in Taiwan. There are, of course, many possible explanations for the high labor turnover rate in Taiwan. One may argue that the high labor turnover rate is due to the inactiveness of the unions in Taiwan and, as a result, workers have no alternative but to quit their jobs if they are discontent with them. However, one may also argue that this is due to excess demand in the labor market which promotes labor turnover. Nonetheless, the high labor turnover rate certainly constitutes another obstacle to the forming of a strong union. Thirdly, with factors such as the large number of SMEs and the high labor turnover rate, the labor market in Taiwan is actually fairly competitive. In addition, the surplus of labor in the labor market was depleted in the mid-1970s, primarily due to the labor-intensive industrial development policies adopted by the government in the 1960s and 1970s. With the tightening of the labor market in Taiwan, employers have had to make every effort to attract and keep workers, so they would not end up being poached and captured by rival firms. As a result, the level of real wages has soared. The statistics show that real wages in the manufacturing sector in Taiwan have increased by a factor of 1.69 during the period from 1976 to 1986. The rapid improvement in worker's compensation, brought about by the competitiveness of the labor market in Taiwan, has not only amplified the spillover effect from the unionized to the non-unionized sector (since any gain in collective bargaining of a union is likely to be matched by other non-unionized forms in any competitive labor market) but also has cut down on the need for collective bargaining, which further limits the role of unions.

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In 1984, industrial relations in Taiwan began to undergo a major change. Since that time, the labor movement has been more active and a greater number of labor disputes have been recorded. However, the driving force behind such change is more political and legal than economic in nature. For instance, many labor regulations, as they are stipulated in the LSL, are not clearly defined and/or there are difficulties in having them implemented. This conflict of interpretation has led to disputes. Furthermore, the lifting of Martial Law in 1986, which not only permitted labor to engage in strikes but also allowed for the formation of opposition political parties, has made industrial relations in Taiwan more complex. Today all political parties are actively seeking the support of labor. Consequently, union leadership has become another arena for the ruling and opposition parties in which to do battle. It appears then that the dominance of SMEs, the labor turnover rate, and the degree of competitiveness in the Taiwanese labor market are still the key economic factors which have stabilized industrial relations in Taiwan.

Relevant Laws Under the Labor Union Law (LUL) which was promulgated in 1929, workers who have attained a full sixteen years of age shall have the right and obligation to join and become a member of a labor union in an industry or craft in which they are engaging; however, those who have already joined an industrial union are not allowed to join a craftsman's union and vice versa. Furthermore, the LUL also stipulates that only one union is allowed to be organized in the same factory or workshop and that persons employed in the administrative or education agencies of the various levels of the government or persons employed in military ammunition industries are not allowed to organize labor unions. Despite the legal stipulations contained in the LUL which require industrial unions to be closed shops (all workers have an "obligation" to join), the majority of workers in Taiwan still are not union members. The statistics show that, in 1988, total union membership in Taiwan was 2,260,585 which only accounts for 27.88 percent of the total number of employed workers in that year. 2 Perhaps contributing to these numbers is the fact that workers who are dismissed for attempting to organize a union at their workplace have no job protection. Therefore, there is a growing demand among union leaders in Taiwan for clauses to be introduced in the Labor Union Law that would protect the workers' jobs while they are engaging in union activities. The clauses are acceptable to the government and the Legislative Yuan (the congress) and will be enacted into law in the near future. The Labor Standards Laws (LSL) have been the center of controversy since their passage in 1984. San 3 has compared the standards laid down in the LSL to

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many of the developed and NIC nations' relevant labor standards, as presented in their labor regulations. The study found that if one compares the regulations which are directly related to the employer's labor cost, (e.g., the minimum wage levels, pension programs, severance pay systems, overtime premiums, wages paid for working on holidays, annual paid vacations, year-end bonuses, and outstanding wage settlement funds) to the relevant regulations in the USA, Great Britain, Japan, West Germany, South Korea, and Singapore, one can see that the standards set by the LSL in Taiwan are by no means inferior to those of the above-mentioned nations. Moreover, with the exception of the regulations on minimum wage levels, Taiwan is the highest among these nations. With such high standards, there will certainly be great difficulty in implementing them among those sectors covered in the LSL. While originally designed to regulate employees in the manufacturing sector, the LSL also covers many of the non-manufacturing sectors as well (e.g., the fishery, mass media, and transportation industries). Therefore, many of the regulations in the LSL are hard to implement in the non-manufacturing sectors. For instance, union members in the fishery sector have questioned whether the stipulations that state the working time of a worker should not exceed eight hours per day and each worker should have one day vacation for every six days of work can be applicable to them when their fishing boats are out at sea. Truck drivers and airline pilots in the transportation sector also face similar problems with regard to the regulation on number of hours worked. Clearly, the inadequacy of many of the labor regulations in the LSL can, and has, caused a dramatic increase in labor disputes in Taiwan.

Nature of Labor Relations Process The impact of the promulgation of the LSL on industrial relations in Taiwan can be examined by looking at the labor dispute statistics in Table 1. From this table, one can see that the total annual number of labor disputes was, in every year, less than one thousand prior to 1984, with the exception of 1982, in which it was mainly caused by the second oil shock. The number of annual cases increased dramatically from 907 in 1984 to 1,443 cases in 1985. Clearly, the impact of the promulgation of the LSL emerged in 1985. From Table 1, one can also see the statistics on the total number of persons that were involved in the disputes. By dividing the total number of persons involved by the total number of disputed cases, one can easily see in column (3) that, especially in the 1980s, on average, each dispute case involved less than ten people. The size of each labor dispute case in Taiwan is certainly very small, which may very well be due to the fact that SMEs compose such a large proportion of the total number of employees in Taiwan's economy. As for the ratio of the total number of workers involved in

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Table 1: Statistics Year

1965 1970 1975 1980 1981 1982 1983 1984 1985 1986 1987

on labor disputes in Taiwan

Labor dispute cases

15 92 458 626 891 1,153 921 907 1,443 1,458 1,609

Persons involved

Average of persons involved per case

% of employed persons involved

259 920 16,809 6,305 7,053 9,501 12,344 9,069 15,486 11,307 15,654

17.3 10.0 36.7 10.1 7.9 8.2 13.4 10.0 10.7 7.8 9.7

0.01 0.02 0.30 0.09 0.10 0.14 0.17 0.11 0.22 0.15 0.019

working lost

days

— —

— — —

— — —

-

1.614

Source: Council of Labor Statistics, Executive Yuan (1988) Yearbook of Labor Statistics. ROC; DGBAS, Executive Yuan (1989) Yearbook of Manpower Statistics. ROC.

labor disputes to the total number of employed workers in Taiwan, the statistics in Table 1 clearly show that the number of disputes was relatively negligible but increased sharply in 1985. One can also examine the major causes of these labor disputes in order to gain more insight. In Table 2, we listed all reported labor disputes and classified them according to their causes from 1980 to 1987. From this table, it can clearly be shown that in recent years "claims for compensation" has been the number one cause of labor disputes. "Wrongful severance", "injury compensation", "arrears of wages", and "business arguments" are all considered as secondary causes of labor disputes. There are many important factors which cause labor disputes, and these factors actually reflect the major issues in Taiwan's labor market. We shall now discuss these factors in turn. In this chapter, we argue that inadequate stipulations in the LSL is the most important factor which has led to labor disputes in Taiwan. The inadequacy can be explained either by looking at the standards, as established by the LSL, or by the inadequate regulations in many of the clauses in the LSL. As stipulated in the first Article of the LSL, the working conditions agreed upon between an employer and his workers shall not be lower than the basic standards set forth in this law. However, when one examines many of the other regulations in the LSL, one finds that these standards are significantly higher than many of the developed, as well as newly industrializing, countries. This will inevitably cause

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